Qvc Group Inc - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• QVC, Inc., as DIP Borrower
• Each subsidiary that is a party to the Subsidiary Guarantee, as Subsidiary Guarantors, guaranteeing the DIP Borrower's obligations under the DIP LC Facility unconditionally and on a joint and several basis
• The DIP Loan Parties shall be jointly and severally liable for the DIP Obligations

Agent / Lender(s)

• JPMorgan Chase Bank, N.A., as Administrative Agent
• The lenders party thereto from time to time, as DIP Lenders
• The issuing banks party thereto from time to time, as Issuing Banks

DIP Commitments

• Debtor-in-possession letter of credit facility (the "DIP LC Facility") in an aggregate principal amount at any time outstanding not to exceed $300 million, all of which was made available upon entry of the Interim Order and continues to be available upon entry of the Final Order
• Each letter of credit issued and outstanding as of the Petition Date under the Prepetition RCF Credit Agreement (the Fifth Amended and Restated Credit Agreement dated as of October 27, 2021 among QVC, Inc. and QVC Global Corporate Holdings, LLC, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties thereto), and set forth on Schedule 1.01E of the DIP LC Agreement, is automatically and without further action deemed outstanding under the DIP LC Facility (the "Continuing Letters of Credit")
  • Each Continuing Letter of Credit is deemed cancelled or otherwise retired under the Prepetition RCF Credit Agreement without further obligation thereunder
  • Any Continuing Letter of Credit drawn fully or in part after the Petition Date but prior to the Closing Date remains subject to the DIP Borrower's reimbursement obligations, which constitute DIP Obligations and shall be cash collateralized in accordance with the DIP Loan Documents
  • The Continuing Letters of Credit are deemed to constitute DIP Obligations, including all fees, expenses, and other amounts payable in respect thereof (including any accrued and unpaid letter of credit fees, commitment fees, and/or fronting fees)
  • The deemed issuance of the Continuing Letters of Credit under the DIP LC Facility is indefeasible and is authorized as compensation for, and as a necessary inducement for, the Issuing Banks' agreement to replace, reissue, upsize, amend, extend, renew, and issue new Letters of Credit under the DIP LC Facility
  • Each Letter of Credit expires no later than one year following issuance, renewal, or extension; for any Letter of Credit with an expiry date after the Termination Date, the borrower must provide to the relevant Issuing Bank cash collateral equal to at least 105% of the face amount thereof or other credit support or backstop arrangements as agreed.
• The borrower may terminate or, from time to time, reduce the aggregate unutilized commitments upon not less than three business days' notice, in minimum increments of $1 million. Any such reduction permanently reduces the Total Commitments then in effect and is applied to each lender's LC Commitment pro rata.

Cash Collateral

• On the Closing Date, the DIP Loan Parties shall fund and maintain cash (the "DIP Collateral") in the LC Cash Collateral Account, which shall be interest-bearing and fully controlled by the Collateral Agent, equal at all times to $315 million in respect of Letters of Credit issued by the Issuing Banks and outstanding under the DIP LC Facility. The LC Cash Collateral Account is an interest-bearing deposit account (approximately 3.25% as of the Closing Date), maintained at JPMorgan Chase Bank, N.A. in the name of the borrower, and fully controlled by the Collateral Agent.
• The funding of the LC Cash Collateral Account is indefeasible and irrevocable, and shall not be stayed, restrained, voidable, avoidable, or recoverable under the Bankruptcy Code or any applicable law (including sections 502(d), 544, and 547 to 550 of the Bankruptcy Code or any applicable state Uniform Voidable Transactions Act, Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, or similar statute or common law), and is not subject to any avoidance, reduction, setoff, recoupment, offset, recharacterization, subordination, counterclaim, cross-claim, defense, or other challenge. Failure to remedy a shortfall within three business days of receipt of a Deficiency Notice from the Administrative Agent constitutes an Event of Default.
• Any rights (including consent rights) and obligations of the Issuing Banks under the Prepetition RCF Credit Agreement are cancelled
• Aside from the cash deposited in the LC Cash Collateral Account and the CB Cash Collateral Account, the Debtors' remaining cash on hand is unencumbered; subject to the terms of the RSA and the "first day" orders, the Debtors may use cash on hand on a postpetition basis to fund ordinary course operations and to perform under their existing obligations, including the payment of QVC Restructuring Expenses

Interest Rate

• Applicable Rate: 2.50% per annum
• Default Rate: 2.0% above the Alternate Base Rate plus the Applicable Rate on all overdue reimbursement obligations and other overdue amounts
• Adjusted Term SOFR Rate floor: 0.00%; Alternate Base Rate floor: 1.00%
• Interest computed by reference to the Term SOFR Rate is calculated on the basis of a 360-day year; interest based on the Alternate Base Rate (whether or not the ABR is then based on the Prime Rate) on Reimbursement Obligations or other amounts is calculated on a 365-day year (366 days in a leap year).

Fees

• Commitment Fee: 0.50% per annum on the average daily unutilized commitments, payable quarterly on each Fee Payment Date.
• Participation Fee: 2.50% per annum (the Applicable Rate) on the average daily LC Exposure (excluding unreimbursed LC Disbursements), payable quarterly in arrears.
• Fronting Fee: not to exceed 0.125% per annum on the average daily LC Exposure (excluding unreimbursed LC Disbursements), plus customary issuance, amendment, renewal, extension, and drawing processing fees as agreed between the borrower and the applicable lender, payable quarterly in arrears.
• Closing Fee: 0.75% of the $300 million Total Commitment, payable ratably to each lender on the Closing Date.
• Non-refundable payment to the Administrative Agent, the DIP Lenders, or the Issuing Banks, as applicable, of all reasonable and documented fees and expenses payable under the DIP Loan Documents from time to time (whether arising prior to or after the Petition Date), including all reasonable and documented fees and expenses of counsel or professionals retained by the Administrative Agent (the "Agent Professional Fees"), without the need to file retention motions or fee applications
• DIP Obligations include all reimbursement obligations, indemnities, and fees and expenses, including letters of credit fees, draw fees, fronting fees, unused facility fees, and the Agent Professional Fees
• Payment of Agent Professional Fees and QVC Restructuring Expenses:
  • The DIP Loan Parties shall pay the Agent Professional Fees and, without duplication, the QVC Restructuring Expenses, no later than five business days (the "Review Period") after receipt by the Reviewing Parties (counsel for the DIP Loan Parties, any statutory committee, and the U.S. Trustee) of the invoices therefor, without the necessity of filing formal fee applications, including any amounts arising before the Petition Date
  • Invoiced Fees shall be in the form of an invoice summary for professional fees and categorized expenses, which need not contain time entries but shall include a general, brief description of the matters for which services were performed and may be redacted to delete privileged or confidential information
  • Reviewing Parties may dispute payment of any portion of the Invoiced Fees within the Review Period by providing written objection (to be followed, if necessary, by a motion with at least ten days' prior written notice of any hearing); the DIP Loan Parties shall promptly pay in full all Invoiced Fees other than the Disputed Invoiced Fees
• Citibank Fees: The Debtors shall reimburse the reasonable fees and expenses of counsel to Citibank incurred in connection with the commencement of the Chapter 11 Cases and entry of the DIP Orders, in an amount not to exceed $75,000

Maturity / Termination

• Maturity is the earliest to occur of:
• October 16, 2026
• The effective date of a plan of reorganization or liquidation in the chapter 11 cases
• The dismissal or conversion of the chapter 11 cases to chapter 7 (or a Bankruptcy Court order directing the same)
• The closing of any sale of assets pursuant to section 363 of the Bankruptcy Code that, taken together with all other asset sales since the Closing Date, constitutes a sale of all or substantially all of the borrower's and its subsidiaries' assets
• The occurrence of an Event of Default
• Events of Default & Remedies: Upon the occurrence of an Event of Default that has not been waived by the requisite DIP Secured Parties, the Administrative Agent shall provide written notice (email correspondence being sufficient) (a "DIP Termination Notice") within five Business Days of such Event of Default (the "DIP Remedies Notice Period") to the Remedies Notice Parties (lead restructuring counsel to the Debtors, lead counsel to the QVC Noteholder Group, any statutory committee, and the U.S. Trustee), that:
  • Declares the occurrence of a DIP Termination Event
  • Terminates the DIP LC Facility and any DIP Loan Documents as to any future liability or obligation of the DIP Loan Parties, but without affecting any of the DIP Obligations or the DIP Liens securing such DIP Obligations
  • Declares all DIP Obligations to be immediately due and payable
  • Terminates, reduces, or restricts any further commitment to extend credit under the DIP LC Facility
  • Reimburses itself from the DIP Collateral for any drawn Letter of Credit and any fees and expenses thereon that have not been reimbursed by the DIP Loan Parties
• The DIP Remedies Notice Period may be extended with the consent of the Required DIP Lenders (including via email)
• The DIP Lenders shall file a motion seeking emergency relief from the automatic stay (the "DIP Emergency Hearing"), and the Court shall schedule an emergency hearing at its earliest opportunity without the necessity of a motion to shorten
• Prior to the expiration of the DIP Remedies Notice Period, the Debtors and/or any Official Committee may seek an emergency hearing to contest whether an Event of Default has occurred and/or is continuing; the DIP Lenders, the Debtors, and the Official Committee consent to such emergency hearing
• At the DIP Emergency Hearing, the Court may fashion an appropriate remedy upon a determination that an Event of Default has occurred and is continuing; other than with respect to exercise of the rights set forth in clauses (i)–(v) above, the automatic stay shall remain in effect until the Court has an opportunity to rule
• Upon entry of a final order at the DIP Emergency Hearing, any reimbursement from the DIP Collateral shall be irreversible, irrevocable, non-avoidable, and not subject to offset or other claims
• During the DIP Remedies Notice Period, the DIP Borrower may not request any issuance, extension, or increase to any Letters of Credit
• As soon as reasonably practicable following receipt of a DIP Termination Notice, the Debtors shall file a copy of such notice on the docket

Use of Proceeds

• Backstop, roll, refinance, replace, or otherwise provide credit support for letters of credit outstanding immediately prior to the Closing Date
• General corporate purposes of the borrower and its subsidiaries
• The court's findings identify the immediate and critical need driving the facility as the debtors' need to continue issuing and extending letters of credit to critical trade vendors and other critical counterparties; this need is addressed under the 'general corporate purposes' prong of the use-of-proceeds covenant.
• Subject to the terms of the RSA and the "first day" orders, the debtors may use unencumbered cash on hand on a postpetition basis for ordinary course operations and to perform under existing obligations, including QVC Restructuring Expenses.

Securities and Priorities

• As security for the DIP Obligations, and effective and automatically perfected as of the date of entry of the Interim Order without the necessity of execution, recordation, or filing of any perfection document or instrument, or the possession or control by the DIP Secured Parties of any DIP Collateral, the Administrative Agent (for its own benefit and for the benefit of the other DIP Secured Parties) is granted valid, enforceable, non-avoidable, and automatically perfected first-priority senior security interests in and liens upon the DIP Collateral pursuant to section 364(c)(2) of the Bankruptcy Code (the "DIP Liens")
• Subject to the terms of the DIP Loan Documents, no party other than the DIP Secured Parties shall at any time have any security interest in the DIP Collateral
• Pursuant to section 364(b) of the Bankruptcy Code, all DIP Obligations relating to the DIP LC Facility shall constitute allowed administrative expense claims against the DIP Loan Parties (without the need to file any proof of claim) (the "DIP Administrative Claims"), considered administrative expenses allowed under section 503(b) of the Bankruptcy Code for purposes of section 1129(a)(9)(A), and payable from and with recourse to all prepetition and postpetition property of the DIP Loan Parties and all proceeds thereof
• All DIP Obligations, including the DIP Administrative Claims, shall be entitled to the full protection of section 364(e) of the Bankruptcy Code in the event the Final Order or any provision is vacated, reversed, or modified
• To the extent any DIP Administrative Claim is not paid in accordance with the DIP Loan Documents, and notwithstanding anything to the contrary in section 362 of the Bankruptcy Code, the DIP Loan Parties are authorized without further notice to the Court to transfer cash in an amount equal to such DIP Administrative Claim from the LC Cash Collateral Account
• Other than claims and liens expressly permitted by the DIP LC Agreement, no claims having a priority superior to those granted to the DIP Secured Parties and no liens shall be permitted on the DIP Collateral while any of the Letters of Credit or the DIP Obligations remain outstanding
• Citibank LC: Upon entry of the DIP Orders, any amounts drawn under Irrevocable Standby Letter of Credit No. 69635038 issued April 2, 2026 by Citibank N.A. on account of QVC, Inc. (on behalf of HSN, Inc.) (the "Citibank LC") pursuant to the Citibank LC Agreement, and all other obligations of the Debtors thereunder, shall be deemed postpetition reimbursement obligations of QVC, Inc. and constitute allowed administrative expense claims against QVC, Inc. with equal priority to the DIP Administrative Expense Claims (the "CB Administrative Expense Claims")
  • To the extent any CB Administrative Expense Claim is not paid within three Business Days of becoming due and payable, and notwithstanding anything to the contrary in section 362 of the Bankruptcy Code, Citibank is authorized without further notice to the Court to transfer cash in an amount equal to such claim from the QVC CBNA Cards Pledge Account A/C# 14696400 (the "CB Cash Collateral Account")
• Texas Taxing Authorities: Any statutory liens on account of ad valorem taxes held by the Texas Taxing Authorities (the "Tax Liens") shall neither be primed by nor made subordinate to any liens granted under the Final Order, to the extent the Tax Liens are valid, senior, perfected, and unavoidable; all parties' rights to object to the priority, validity, amount, and extent of the claims and liens asserted by the Texas Taxing Authorities are fully preserved

Waivers

• Pursuant to section 1141(d)(4) of the Bankruptcy Code, the DIP Loan Parties have waived any discharge as to any remaining DIP Obligations, as applicable
• Waiver of any applicable stay (including under Bankruptcy Rule 6004) and provision for the immediate effectiveness of the Final Order
• Vacation and modification of the automatic stay under section 362 of the Bankruptcy Code to the extent necessary to permit the Debtors and their affiliates and the DIP Secured Parties to implement and effectuate the terms and provisions of the DIP Loan Documents and the Final Order, and to deliver any notices of termination
• Each party has waived any right to a trial by jury in any proceeding arising out of or relating to the DIP LC Agreement, the other Loan Documents, or the transactions contemplated thereby.