SOHU.COM INC. (NASDAQ:SOHU) Files An 8-K Entry into a Material Definitive AgreementItem 1.01.
Amendment to PAB Credit Agreements
As previously described in a Current Report on Form 8-K filed by the registrant on May19, 2017, the registrant entered into credit agreements (the “Original PAB Credit Agreements”) with Ping An Bank Co., Ltd., a commercial bank with headquarters in Shenzhen, PRC (“Ping An Bank”), to which the registrant was entitled to borrow from Ping An Bank from time to time up to a combined aggregate of RMB2.5billion (or approximately US$383million) (the “PAB Loan”). The PAB Loan was secured by pledges of the registrant’s two buildings in Beijing, including the building that serves as the registrant’s corporate headquarters in Beijing. On September1, 2017 the registrant and Ping An Bank entered into an amendment to the Original PAB Credit Agreements to which (i)the maximum amount that the registrant is entitled to borrow under the Original PAB Credit Agreements has been reduced from RMB2.5billion to RMB600million (or approximately US$92 million), and (ii)the building that serves as the registrant’s corporate headquarters has been released from the pledge. A copy of the amendment to the Original PAB Credit Agreements is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
New Credit Arrangement with ICBC
On September 7, 2017, the registrant entered into a credit agreement (together with related agreements and documentation, the “ICBC Credit Agreement”) with the Industrial and Commercial Bank of China Limited (“ICBC”), a commercial bank with headquarters in Beijing, the People’s Republic of China, to which the registrant is entitled to borrow from ICBC up to an aggregate of RMB800million (or approximately US$123 million) (the “ICBC Loan”).
The registrant may make drawdowns of the ICBC Loan from time to time, with the first drawdown to be made no later than December31, 2017 and the last drawdown to be made no later than March31, 2018. The outstanding principal of each drawdown will be payable in four equal installments, with the first installment payable 18 months after the drawdown and the other three installments payable semi-annually at the end of each of the three successive six-month periods after the first installment payment; provided however, that all of the outstanding principal amount of the ICBC Loan must be repaid in full 36 months after the initial drawdown. Interest will accrue on the principal amount of the ICBC Loan outstanding from time to time at an annual rate equal to the Loan Prime Rate (“LPR”) for loans with terms of up to one year as published by the National Interbank Funding Center for the 21st day of the last month of each calendar quarter, plus 1.2%, and will be payable on the first business day after the 20th day of the last month of each calendar quarter. As the LPR is currently 4.3% per year for loans with terms of up to one year, the initial annual interest rate applicable to the initial drawdown is expected to be approximately 5.5%.
The registrant’s obligations under the ICBC Credit Agreement are secured by a pledge of the building in Beijing that serves as the registrant’s corporate headquarters.
In connection with the ICBC Credit Agreement, the registrant entered into an agreement (the “Commitment Letter”) with ICBC to which the registrant has agreed that in the event the registrant is unable to repay in full the outstanding principal and interest of the ICBC Loan, (i)if the registrant has sold ordinary shares of the registrant’s majority-owned subsidiary Changyou.com Limited (“Changyou”) beneficially owned by the registrant, the registrant will make the net proceeds of such sale available for payment of the amounts of the ICBC Loan that are then due and payable; and (ii)if the registrant has not sold ordinary shares of Changyou, the registrant will use its best efforts to cause Changyou, subject to applicable law and fiduciary principles, to pay a cash dividend (a “Changyou Dividend”) to Changyou’s shareholders, and will make the registrant’s share of any such Changyou Dividend available for repayment of the ICBC Loan. The registrant has also agreed in the Commitment Letter that, at all times when the ICBC Loan is outstanding, the registrant will maintain a “Net Cash Balance” of the registrant and its consolidated group of not less than US$200million. “Net Cash Balance” is defined as (a)(i)cash and cash equivalents, plus (ii)restricted cash related to liabilities to third parties for borrowed money, plus (iii)investments in financial instruments, minus (b)the aggregate combined amounts of outstanding liabilities to third parties for borrowed money, including for such purpose amounts of liabilities to third parties that are guaranteed by the registrant or any of its subsidiaries or variable interest entities.
The ICBC Credit Agreement includes customary events of default, including the registrant’s failure to pay any installment of principal or interest when due; changes in business model, capital structure, and other events with respect to the registrant that may impede the registrant’s ability to repay any portion of the ICBC Loan; and the failure of applicable subsidiaries of the registrant to repay other indebtedness for borrowed money when due. Upon the occurrence of an event of default under the ICBC Credit Agreement, ICBC may refuse to make further advances under the ICBC Credit Agreement and demand payment in full of all outstanding principal of the ICBC Loan and all accrued and unpaid interest.
The registrant intends to use the proceeds of the ICBC Loan to finance the registrant’s operations, excluding the operations of the registrant’s subsidiaries Changyou and Sogou Inc.
The foregoing summary is not intended to be complete and is qualified in its entirety by reference to the ICBC Credit Agreement (including related documents), English translations of which are filed herewith as Exhibits 10.2, 10.3, 10.4, and 10.5 and are incorporated herein by reference.
|Item 1.01||Financial Statements and Exhibits.|
(d) The following Exhibits are filed as part of this report:
|10.1||English translation of Amendment to the Original PAB Credit Agreements, dated September1, 2017|
|10.2||English translation of Credit Agreement, dated September7, 2017, between ICBC and Beijing Sohu New Media Information Technology Co., Ltd., Fox Information Technology (Tianjin) Limited, and Beijing Sohu New Momentum Information Technology Co., Ltd.|
|10.3||English translation of Asset Pledge Agreement, dated September7, 2017, between ICBC and Beijing Sohu New Momentum Information Technology Co., Ltd.|
|10.4||English translation of Asset Pledge Agreement, dated September7, 2017, between ICBC and Beijing Sohu New Media Information Technology Co., Ltd.|
|10.5||English translation of Commitment Letter, dated September7, 2017, between ICBC and the registrant|
Safe Harbor Statement
This report on Form 8-K includes forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. The registrant cautions you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, recent slow-downs in the growth of the Chinese economy; the registrant’s current and projected future losses due to increased spending by the registrant for video content; the possibilities that the registrant will be unable to recoup its investment in video content; and the registrant’s reliance on online advertising sales, online games and mobile services for its revenues. Further information regarding these and other risks is included in the registrant’s annual report on Form 10-K for the year ended December31, 2016, and other filings with the Securities and Exchange Commission.
SOHU COM INC ExhibitEX-10.1 2 d456136dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 English Translation Amendment to Credit Agreement This Amendment to Credit Agreement ( hereinafter referred to as Supplemental Agreement) is entered into by and among the parties below on September 1,…To view the full exhibit click
About SOHU.COM INC. (NASDAQ:SOHU)
Sohu.com Inc. (Sohu) is an online media, search and game service company providing online products and services on personal computers (PCs) and mobile devices in the People’s Republic of China (the PRC). The Company operates through three segments: the Sohu segment; the Sogou segment, and the Changyou segment. Sogou is an online search, client software and mobile Internet product provider in China. Changyou is an online game developer and operator in China as measured by its MMOG Tian Long Ba Bu (TLBB) and its mobile game TLBB three-dimensional (TLBB 3D), and engages primarily in the development, operation and licensing of online games for PCs and mobile devices. The Sohu segment’s main business is the brand advertising business, which offers to users, over its matrices of Chinese language online media, various content, products and services across multiple Internet-enabled devices.