Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt

v3.23.1
Long-Term Debt
3 Months Ended
Mar. 31, 2023
Long-Term Debt

(7) Long-Term Debt

Debt is summarized as follows:

Outstanding

Carrying value

    

Principal

    

March 31,

    

December 31,

 

March 31, 2023

2023

2022

amounts in millions

Liberty SiriusXM Group

Corporate level notes and loans:

1.375% Cash Convertible Senior Notes due 2023 (1)

$

199

 

215

968

3.75% Convertible Senior Notes due 2028 (1)

575

585

2.125% Exchangeable Senior Debentures due 2048 (1)

275

275

382

2.75% Exchangeable Senior Debentures due 2049 (1)

586

544

559

0.5% Exchangeable Senior Debentures due 2050 (1)

920

908

920

Sirius XM Holdings Margin Loan

875

 

875

 

875

Live Nation Margin Loan

 

Subsidiary notes and loans:

Sirius XM 3.125% Senior Notes due 2026

1,000

992

992

Sirius XM 5.0% Senior Notes due 2027

1,500

1,493

1,492

Sirius XM 4.0% Senior Notes due 2028

2,000

1,983

1,982

Sirius XM 5.50% Senior Notes due 2029

1,250

1,240

1,240

Sirius XM 4.125% Senior Notes due 2030

1,500

1,487

1,487

Sirius XM 3.875% Senior Notes due 2031

1,500

1,485

1,485

Pandora 1.75% Convertible Senior Notes due 2023

118

118

193

Sirius XM Senior Secured Revolving Credit Facility

 

210

 

210

 

80

Sirius XM Incremental Term Loan

500

500

500

Deferred financing costs

(10)

(12)

Total Liberty SiriusXM Group

13,008

12,900

13,143

Braves Group

Subsidiary notes and loans:

Notes and loans

 

542

 

542

 

546

Deferred financing costs

(4)

(4)

Total Braves Group

542

538

542

Formula One Group

Corporate level notes and loans:

1% Cash Convertible Notes due 2023 (1)

44

2.25% Convertible Senior Notes due 2027 (1)

475

516

458

Other

63

63

63

Subsidiary notes and loans:

Senior Loan Facility

2,420

2,386

2,389

Deferred financing costs

(7)

(7)

Total Formula One Group

2,958

2,958

2,947

Total debt

$

16,508

 

16,396

 

16,632

Debt classified as current

 

(706)

 

(1,679)

Total long-term debt

$

15,690

 

14,953

(1) Measured at fair value

1.375% Cash Convertible Senior Notes due 2023

On October 17, 2013, Liberty issued $1 billion aggregate principal amount of the Convertible Notes.  The Convertible Notes will mature on October 15, 2023 unless earlier repurchased by us or converted.  Accordingly, the Convertible Notes are classified as a current liability in the condensed consolidated balance sheets. Interest on the Convertible Notes is payable semi-annually in arrears on April 15 and October 15 of each year at a rate of 1.375% per annum. All conversions of the Convertible Notes will be settled solely in cash, and not through the delivery of any securities. During the three months ended March 31, 2023, Liberty paid approximately $662 million to repurchase approximately $591 million aggregate principal amount of the Convertible Notes.

Since the date of issuance, the conversion, adjustment and other provisions of the indenture have been amended to give effect to certain transactions. The consideration due upon conversion of any Convertible Note shall be determined based on the Securities Basket, consisting of 0.1087 of a share of Series A Liberty Braves common stock, 1.0163 shares of Series A Liberty SiriusXM common stock and 0.25 of a share of Series A Liberty Formula One common stock as of March 31, 2023.

Holders of the Convertible Notes may convert their notes at their option at any time prior to the close of business on the second business day immediately preceding the maturity date of the notes under certain circumstances. Liberty has elected to account for this instrument using the fair value option. See note 5 for information related to unrealized gains (losses) on debt measured at fair value.

Additionally, contemporaneously with the issuance of the Convertible Notes, Liberty entered into a bond hedge transaction (the “Bond Hedge Transaction”). The Bond Hedge Transaction is expected to offset potential cash payments Liberty would be required to make in excess of the principal amount of the Convertible Notes, upon conversion of the notes in the event that the volume-weighted average price per share of the components of the Securities Basket, as measured under the cash convertible note hedge transactions on each trading day of the relevant cash settlement averaging period or other relevant valuation period, was greater than the strike price of the components of the Securities Basket. During the three months ended March 31, 2023, Liberty received approximately $83 million for the settlement of the portion of the bond hedge related to the repurchase of Convertible Notes described above. As of March 31, 2023, the Bond Hedge Transaction covered, in the aggregate, 1,051,238 shares of Series A Liberty Formula One common stock, 4,273,491 shares of Series A Liberty SiriusXM common stock and 457,078 shares of Series A Liberty Braves common stock, subject to anti-dilution adjustments pertaining to the Convertible Notes, which is equal to the aggregate number of shares comprising the Securities Basket underlying the Convertible Notes. The bond hedge expires on October 15, 2023 and is included in Other current assets as of March 31, 2023 and December 31, 2022 in the accompanying condensed consolidated balance sheets, with changes in the fair value recorded as unrealized gains (losses) on financial instruments in the accompanying condensed consolidated statements of operations.

Concurrently with the Convertible Notes and Bond Hedge Transaction, Liberty also entered into separate privately negotiated warrant transactions under which Liberty sold warrants relating to the same underlying shares of the Convertible Notes and Bond Hedge Transaction, subject to anti-dilution adjustments. The first expiration date of the warrants is January 16, 2024 and the remainder expire over a period covering 81 days thereafter. Liberty may elect to settle its delivery obligation under the warrant transactions with cash. During the three months ended March 31, 2023, Liberty paid approximately $44 million for the settlement of the portion of the obligation under the warrants related to the repurchase of Convertible Notes described above. As of March 31, 2023, the warrants covered, in the aggregate, 1,051,238 shares of Series A Liberty Formula One common stock, 4,273,491 shares of Series A Liberty SiriusXM common stock and 457,078 shares of Series A Liberty Braves common stock, subject to anti-dilution adjustments. The strike price of the warrants, based on the basket of shares, was $61.16 per share as of March 31, 2023. As of March 31, 2023, the basket price of the securities underlying the warrants was $49.18 per share, which is the same as the basket price of the securities underlying

the Bond Hedge Transaction. The warrants may have a dilutive effect with respect to the shares comprising the Securities Basket underlying the warrants to the extent that the settlement price exceeds the strike price of the warrants, and the warrants are settled in shares comprising such Securities Basket.

The Convertible Notes, Bond Hedge Transaction and warrants are attributed to the Liberty SiriusXM Group.

1% Cash Convertible Notes due 2023

On January 23, 2017, Liberty issued $450 million cash convertible notes at an interest rate of 1% per annum, which were convertible, under certain circumstances, into cash based on the trading prices of the underlying shares of Series C Liberty Formula One common stock and matured on January 30, 2023 (the ‘‘1% Convertible Notes’’). The initial conversion rate for the notes was approximately 27.11 shares of Series C Liberty Formula One common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $36.89 per share of Series C Liberty Formula One common stock. The conversion of the 1% Convertible Notes was settled solely in cash, and not through the delivery of any securities. In January 2023, Liberty paid approximately $47 million to settle the remaining 1% Convertible Notes.

2.25% Convertible Senior Notes due 2027

On August 12, 2022, Liberty issued $475 million convertible notes at an interest rate of 2.25% per annum, which, at Liberty’s election, are convertible into cash, shares of Series C Liberty Formula One common stock or a combination of cash and shares of Series C Liberty Formula One common stock and mature on August 15, 2027. The initial conversion rate for the notes is approximately 11.6198 shares of Series C Liberty Formula One common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $86.06 per share of Series C Liberty Formula One common stock. The notes are attributed to the Formula One Group. Liberty has elected to account for the notes using the fair value option. See note 5 for information related to unrealized gains (losses) on debt measured at fair value.

3.75% Convertible Senior Notes due 2028

On March 10, 2023 Liberty issued $575 million convertible notes at an interest rate of 3.75% per annum, which, at Liberty’s election, are convertible into cash, shares of Series A Liberty SiriusXM common stock or a combination of cash and shares of Series A Liberty SiriusXM common stock and mature on March 15, 2028. The initial conversion rate for the notes is approximately 25.9000 shares of Series A Liberty SiriusXM common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $38.61 per share of Series A Liberty SiriusXM common stock. The notes are attributed to the Liberty SiriusXM Group. Liberty has elected to account for the notes using the fair value option. See note 5 for information related to unrealized gains (losses) on debt measured at fair value.

2.125% Exchangeable Senior Debentures due 2048

On March 6, 2018, Liberty closed a private offering of approximately $400 million aggregate principal amount of its 2.125% exchangeable senior debentures due 2048 (the “2.125% Exchangeable Senior Debentures due 2048”). Upon an exchange of debentures, pursuant to a supplemental indenture entered into in February 2023, Liberty could deliver solely cash to satisfy its exchange obligations. The number of shares of Sirius XM Holdings common stock attributable to a debenture represented an initial exchange price of approximately $8.02 per share. A total of approximately 49.9 million shares of Sirius XM Holdings common stock were attributable to the debentures. Interest was payable quarterly on March 31, June 30, September 30 and December 31 of each year. The debentures could be redeemed by Liberty, in whole or in part, on or after April 7, 2023. Holders of the debentures also had the right to require Liberty to purchase their debentures on April 7, 2023. Accordingly, the 2.125% Exchangeable Senior Debentures due 2048 are classified as a current liability

in the condensed consolidated balance sheets. During the three months ended March 31, 2023, Liberty paid approximately $112 million to repurchase approximately $112 million aggregate principal amount of the debentures. In April 2023, Liberty paid approximately $275 million to settle the remaining debentures. The debentures were attributed to the Liberty SiriusXM Group. Liberty elected to account for the debentures using the fair value option. See note 5 for information related to unrealized gains (losses) on debt measured at fair value.

2.75% Exchangeable Senior Debentures due 2049

On November 26, 2019, Liberty closed a private offering of approximately $604 million aggregate principal amount of its 2.75% exchangeable senior debentures due 2049 (the “2.75% Exchangeable Senior Debentures due 2049”). Upon an exchange of debentures, Liberty, at its option, may deliver Sirius XM Holdings common stock, Series C Liberty SiriusXM common stock, cash or a combination of Sirius XM Holdings common stock, Series C Liberty SiriusXM common stock and/or cash. The number of shares of Sirius XM Holdings common stock attributable to a debenture represents an initial exchange price of approximately $8.62 per share. A total of approximately 70 million shares of Sirius XM Holdings common stock are attributable to the debentures. Interest is payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing March 1, 2020. The debentures may be redeemed by Liberty, in whole or in part, on or after December 1, 2024. Holders of the debentures also have the right to require Liberty to purchase their debentures on December 1, 2024. The redemption and purchase price will generally equal 100% of the adjusted principal amount of the debentures plus accrued and unpaid interest to the redemption date, plus any final period distribution. The debentures are attributed to the Liberty SiriusXM Group. Liberty has elected to account for the debentures using the fair value option. See note 5 for information related to unrealized gains (losses) on debt measured at fair value.

0.5% Exchangeable Senior Debentures due 2050

In November 2020, Liberty closed a private offering of approximately $920 million aggregate principal amount of its 0.5% exchangeable senior debentures due 2050 (the “0.5% Exchangeable Senior Debentures due 2050”). Upon an exchange of debentures, Liberty, at its option, may deliver Live Nation common stock, cash or a combination of Live Nation common stock and/or cash. The number of shares of Live Nation common stock attributable to a debenture represents an initial exchange price of approximately $90.10 per share. A total of approximately 10 million shares of Live Nation common stock are attributable to the debentures. Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year, commencing March 1, 2021. The debentures may be redeemed by Liberty, in whole or in part, on or after September 1, 2024. Holders of the debentures also have the right to require Liberty to purchase their debentures on September 1, 2024. The redemption and purchase price will generally equal 100% of the adjusted principal amount of the debentures plus accrued and unpaid interest to the redemption date, plus any final period distribution. The debentures are attributed to the Liberty SiriusXM Group. Liberty has elected to account for the debentures using the fair value option. See note 5 for information related to unrealized gains (losses) on debt measured at fair value.

Margin Loans

Sirius XM Holdings Margin Loan

In February 2021, Liberty Siri MarginCo, LLC (“Siri MarginCo”), a wholly-owned subsidiary of Liberty, amended its margin loan agreement secured by shares of Sirius XM Holdings common stock (the “Sirius XM Holdings Margin Loan”) that was comprised of an $875 million term loan and an $875 million revolving line of credit. The term loan and any drawn portion of the revolver carried an interest rate of LIBOR plus 2.00% with the undrawn portion carrying a fee of 0.50%. In March 2023, Siri MarginCo amended the Sirius XM Holdings Margin Loan, increasing the revolving line of credit to $1,075 million, extending the maturity to March 2026 and changing the interest rate to the Secured Overnight Financing Rate (“SOFR”) plus 2.25%. Borrowings outstanding under the Sirius XM Holdings Margin Loan

bore interest at a rate of 7.25% per annum at March 31, 2023. As of March 31, 2023, availability under the Sirius XM Holdings Margin Loan was $1,075 million. As of March 31, 2023, 1.0 billion shares of the Company’s Sirius XM Holdings common stock with a value of $3,970 million were held in collateral accounts related to the Sirius XM Holdings Margin Loan. The margin loan contains various affirmative and negative covenants that restrict the activities of the borrower. The margin loan does not include any financial covenants.

Live Nation Margin Loan

On November 9, 2020, the Live Nation Margin Loan agreement was amended, reducing the borrowing capacity to $200 million, increasing the interest rate to LIBOR plus 2.0%, decreasing the undrawn commitment fee to 0.5% per annum and extending the maturity date to December 9, 2022. On December 3, 2021, the margin loan was amended, increasing the borrowing capacity to $400 million. On May 9, 2022, the margin loan was amended, replacing the delayed draw term loan with a $400 million revolving line of credit, changing the interest rate to the Adjusted Term SOFR plus Term SOFR Adjustment (0.1%) plus 2.0% and extending the maturity to May 9, 2025. Interest on the margin loan is payable on the last business day of each calendar quarter. As of March 31, 2023, availability under the Live Nation Margin Loan was $400 million. As of March 31, 2023, 9.0 million shares of the Company’s Live Nation common stock with a value of $628 million were pledged as collateral to the loan. The Live Nation Margin Loan contains various affirmative and negative covenants that restrict the activities of the borrower. The loan agreement does not include any financial covenants. The Live Nation Margin Loan is attributed to the Liberty SiriusXM Group.

Pandora 1.75% Convertible Senior Notes due 2023

Sirius XM Holdings acquired $193 million aggregate principal amount of the 1.75% Convertible Senior Notes due 2023 (the “Pandora Notes due 2023”) as part of the acquisition of Pandora Media, Inc. in 2019. During the three months ended March 31, 2023, certain investors exercised their right to require a Special Repurchase, as defined in the indenture governing such notes, and Pandora repurchased $75 million principal amount of the Pandora Notes due 2023 with cash for an aggregate purchase price equal to 100% of the principal amount of the notes repurchased plus accrued and unpaid interest to the date of repurchase. The Pandora Notes due 2023 were not convertible into common stock and were not redeemable as of March 31, 2023.

Sirius XM Holdings Senior Secured Revolving Credit Facility and Incremental Term Loan

Sirius XM Holdings entered into a Senior Secured Revolving Credit Facility (the "Credit Facility") with a syndicate of financial institutions with a total borrowing capacity of $1,750 million which matures in August 2026. The Credit Facility is guaranteed by certain of Sirius XM Holdings’ material domestic subsidiaries and is secured by a lien on substantially all of Sirius XM Holdings' assets and the assets of its material domestic subsidiaries. Interest on borrowings is payable on a monthly basis and accrues at a rate based on either the SOFR or LIBOR plus an applicable rate. Pursuant to an amendment to the Credit Facility entered into during March 2023, interest on borrowings on or after July 1, 2023 will no longer be based on LIBOR. Borrowings outstanding under the Credit Facility bore interest at a rate of 7.09% per annum as of March 31, 2023. Sirius XM Holdings is required to pay a variable fee on the average daily unused portion of the Credit Facility which was 0.25% per annum as of March 31, 2023 and is payable on a quarterly basis. The Credit Facility contains customary covenants, including a maintenance covenant. Availability under the Credit Facility was $1,540 million as of March 31, 2023.

On April 11, 2022, Sirius XM Holdings entered into an amendment to the Credit Facility to incorporate an incremental term loan borrowing of $500 million which matures on April 11, 2024. Interest on the incremental term loan borrowing is based on SOFR plus an applicable rate. Borrowings outstanding under the incremental term loan bore interest at a rate of 5.85% per annum as of March 31, 2023.

Braves Holdings Notes and Loans

Braves Holdings’ debt, primarily related to the Stadium and Mixed-Use Development, is summarized as follows:

Carrying value

 

As of March 31, 2023

March 31,

    

December 31,

 

Borrowing

Weighted avg

Maturity

2023

2022

 

Capacity

interest rate

Date

dollar amounts in millions

Operating credit facilities

$

275

NA

various

Ballpark funding

 

Senior secured note

169

172

NA

3.77%

September 2041

Stadium credit facility

43

44

44

6.18%

July 2026

Spring training credit facility

30

30

NA

3.65%

December 2030

Mixed-use credit facilities and loans

300

300

428

5.12%

various

Total Braves Holdings

$

542

546

Formula 1 Loans

On November 23, 2022, Formula 1 refinanced its previous $2.9 billion first lien Term Loan B and $500 million revolving credit facility with a new $725 million first lien Term Loan A, a refinanced $1.7 billion Term Loan B and a new $500 million revolving credit facility (collectively, the “Senior Loan Facility”). The Term Loan A and revolving credit facility mature on January 15, 2028 and the Term Loan B matures on January 15, 2030.  As of March 31, 2023, there were no outstanding borrowings under the $500 million revolving credit facility. The margin for the Term Loan B is 3.25% with the potential to step down to 3.00% if a certain leverage test is met. This leverage test was met as of March 31, 2023. The margin for the new Term Loan A and revolving credit facility is between 1.50% and 2.25% depending on leverage ratios, amongst other things, and is fixed at 1.75% for the first year. The reference rate for the Term Loan A, Term Loan B and dollar borrowings under the revolving credit facility is Term SOFR. The interest rate on the Senior Loan Facility was approximately 7.62% as of March 31, 2023. The Senior Loan Facility remains non-recourse to Liberty. The Senior Loan Facility is secured by share pledges and floating charges over Formula 1’s primary operating companies with certain cross guarantees. Additionally, in order to manage its interest rate risk, as of March 31, 2023, Formula 1 has interest rate swaps on $2.1 billion of the $2.4 billion Senior Loan Facility which expire during the first quarter of 2024 and has entered into $1.1 billion of forward starting swaps with a termination date in December 2029 and an optional early termination date in December 2027.

Debt Covenants

The Sirius XM Holdings Credit Facility contains certain financial covenants related to Sirius XM Holdings’ leverage ratio. Braves Holdings’ debt contains certain financial covenants related to Braves Holdings’ debt service coverage ratio, fixed charge coverage ratio and debt yield ratio. The Formula 1 Senior Loan Facility contains certain financial covenants, including a leverage ratio. Additionally, Sirius XM Holdings’ Credit Facility, Braves Holdings’ debt, Formula 1 debt and other borrowings contain certain non-financial covenants. The Company, Sirius XM Holdings, Formula 1 and Braves Holdings were in compliance with their debt covenants as of March 31, 2023.

Fair Value of Debt

The fair value, based on quoted market prices of the same instruments but not considered to be active markets (Level 2), of Sirius XM Holdings’ publicly traded debt securities, not reported at fair value, are as follows (amounts in millions):

    

March 31, 2023

 

Sirius XM 3.125% Senior Notes due 2026

$

884

Sirius XM 5.0% Senior Notes due 2027

$

1,365

Sirius XM 4.0% Senior Notes due 2028

$

1,683

Sirius XM 5.50% Senior Notes due 2029

$

1,105

Sirius XM 4.125% Senior Notes due 2030

$

1,192

Sirius XM 3.875% Senior Notes due 2031

$

1,133

Pandora 1.75% Convertible Senior Notes due 2023

$

117

Due to the variable rate nature of the Credit Facility, margin loans and other debt, the Company believes that the carrying amount approximates fair value at March 31, 2023.