Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On June 25, 2019, Virgin Media Secured Finance PLC (the “
Issuer
”) (an indirect wholly-owned subsidiary of the Registrant) entered into a purchase agreement (the “
Purchase Agreement
”) with, among others, Citigroup Global Markets Inc., as representative of the several initial purchasers named therein (the “
Initial Purchasers
”), pursuant to which the Issuer agreed to sell, subject to the terms and conditions set forth therein, $600.0 million aggregate principal amount of its 5.50% senior secured notes due 2029 (the “
Additional Notes
”), at 101.750%, to the Initial Purchasers, in a private offering in accordance with Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Additional Notes will mature on May 15, 2029. Interest on the Additional Notes will be payable semi-annually in arrears on each May 15 and November 15, beginning on November 15, 2019.
On July 5, 2019 (the “
Issue Date
”), subject to the terms and conditions of the Purchase Agreement, the Additional Notes will be issued to the Initial Purchasers pursuant to an indenture (the “
Indenture
”), dated May 16, 2019, between the Issuer and BNY Mellon Corporate Trustee Services Limited as trustee, which was filed with the United States Securities and Exchange Commission on Form 8-K/A on May 17, 2019.
The Issuer is a finance subsidiary of Virgin Media Investment Holdings Limited (“
VMIH
”) with no significant assets of its own other than its intercompany loans to VMIH or any other parent entity.
The following description of the Additional Notes and the transactions contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Indenture.
Use of proceeds
The net proceeds from the issuance of the Additional Notes will be used to redeem in full (i) the 5.50% sterling-denominated senior secured notes due 2021 issued by the Issuer and (ii) the 5.25% dollar-denominated senior secured notes due 2021 issued by the Issuer.
Optional redemption
Subject to the below, the Additional Notes are non-callable until May 15, 2024.
At any time prior to May 15, 2024, the Issuer may redeem some or all of the Additional Notes, at a price equal to 100% of the principal amount of the Additional Notes, redeemed plus accrued and unpaid interest, if any, to (but excluding) the redemption date plus a “make-whole” premium, which is the present value of all remaining scheduled interest payments to the redemption date using the discount rate (as specified in the Indenture) as of the redemption date plus 50 basis points.
At any time prior to May 15, 2024, the Issuer may redeem during each twelve-month period commencing with the Issue Date up to 10% of the original aggregate principal amount of the Additional Notes, at a redemption price equal to 103% of the principal amount of the Additional Notes redeemed, plus accrued and unpaid interest and additional amounts, if any, to (but excluding) the redemption date.
On or after May 15, 2024, the Issuer may redeem all, or from time to time a part, of the Additional Notes at the following redemption prices (expressed as a percentage of the principal amount) plus accrued and unpaid interest and additional amounts, if any, to (but excluding) the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period commencing on May 15 of the years set forth below:
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Redemption Price
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Year
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Additional Notes
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2024
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102.7500%
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2025
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101.3750%
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2026
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100.6875%
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2027 and thereafter
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100.0000%
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At any time prior to May 15, 2024, the Issuer may redeem up to 40% of the Additional Notes with the net proceeds of one or more specified equity offerings at a redemption price of 105.500% of the principal amount of the Additional Notes redeemed, plus accrued and unpaid interest and additional amounts, if any, to (but excluding) the date of redemption.
Change of control
In the event of certain events defined as constituting a change of control, the Issuer may be required to make an offer to purchase the Additional Notes.
Ranking, guarantee and security
The Additional Notes will be senior obligations of the Issuer. The Additional Notes will rank equally in right of payment with all existing and future indebtedness of the Issuer that is not subordinated in right of payment to the Additional Notes and will be senior in right of payment to all existing and future indebtedness of the Issuer that is subordinated in right of payment to the Additional Notes.
The Additional Notes will be guaranteed on a senior basis by Virgin Media Inc. and certain of its subsidiaries and will be secured by liens on substantially all of the assets of VMIH, the Issuer and certain of the guarantors.