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Subsequent Events Subsequent Event (Note)
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12 Months Ended |
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Dec. 31, 2014
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| Subsequent Events [Abstract] | |
| Subsequent Events [Text Block] |
SUBSEQUENT EVENTS
New Credit Agreement
On January 27, 2015, HSNi entered into a $1.25 billion five-year syndicated credit agreement ("Credit Agreement") which is secured by 100% of the voting equity securities of HSNi's U.S. subsidiaries and 65% of HSNi's first-tier foreign subsidiaries. The Credit Agreement replaced the existing $600 million credit facility that was set to expire in April 2017. Certain HSNi subsidiaries have unconditionally guaranteed HSNi's obligations under the Credit Agreement. The Credit Agreement, which includes a $750 million revolving credit facility and a $500 million term loan, may be increased up to $1.75 billion subject to certain conditions and expires January 27, 2020. HSNi drew $200 million from its term loan under the new Credit Agreement on January 27, 2015 to repay its existing term loan of $228.1 million and drew the remaining $300 million from its term loan and $200 million under the revolving credit facility, both under the new Credit Agreement, on February 18, 2015 to fund a $524 million special cash dividend that was paid on February 19, 2015, as discussed below.
In connection with the termination of the prior credit agreement, of the unamortized deferred financing costs of $2.4 million, $0.5 million will be written off in the first quarter of 2015. The balance of $1.9 million will be amortized to interest expense over the five-year term of the new Credit Agreement in addition to the $6.6 million in capitalized financing costs related to the new Credit Agreement.
The Credit Agreement includes various covenants, limitations and events of default customary for similar facilities
including a maximum leverage ratio of 3.50x and a minimum interest coverage ratio of 3.00x. Loans under the Credit Agreement bear interest at a per annum rate equal to a LIBOR rate plus a predetermined margin that ranges from 1.50% to 2.25% or the Base Rate (as defined in the Credit Agreement) plus a predetermined margin that ranges from 0.50% to 1.25%. HSNi can elect to borrow at either a LIBOR or the Base Rate and the predetermined margin is based on HSNi's leverage ratio. HSNi pays a commitment fee ranging from 0.20% to 0.40% (based on the leverage ratio) on the unused portion of the revolving credit facility.
Special Cash Dividend and Share Repurchase Program
Effective January 27, 2015, HSNi's Board of Directors approved a special cash dividend of $10.00 per common share, representing $524 million in the aggregate, that was paid February 19, 2015 to HSNi record holders as of February 9, 2015. The special cash dividend was funded primarily from HSNi's new $1.25 billion Credit Agreement. As of December 31, 2014, on a pro forma basis after giving retroactive effect to the special cash dividend, HSNi's leverage ratio of net debt to Adjusted EBITDA would have been approximately 1.8x. Additionally, the Board also authorized a new share repurchase program covering 4 million shares, principally to offset dilution related to HSNi's equity compensation programs.
In conjunction with the special cash dividend, as required by the anti-dilution provisions of HSNi's equity compensation plans (the "Plans"), adjustments were made to outstanding equity awards as of the ex-dividend date to preserve their value following the dividend, as follows: (i) the number of shares subject to outstanding RSUs was increased as a result of the reinvestment of the dividend; and (ii) the exercise prices of outstanding stock options and SARs and the grant date fair value of MSUs were reduced and the number of shares subject to such awards was increased. Approximately 452,000 additional awards were issued as a result of the special dividend. These adjustments did not result in additional stock-based compensation expense, as the fair value of the outstanding awards did not change. As further required by the Plans, the maximum number of shares issuable under the Plans was also proportionally adjusted, which resulted in approximately 943,000 additional shares available to be issued.
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