SOHU.COM INC. (NASDAQ:SOHU) Files An 8-K Entry into a Material Definitive AgreementItem 1.01.
On April11, 2018, the registrant entered into a credit facility agreement (together with related agreements and documentation, the “CMB Credit Agreement”) with the China Merchants Bank Co., Ltd. (“CMB”), a commercial bank with headquarters in the People’s Republic of China (the “PRC”), to which the registrant is entitled to borrow up to an aggregate of RMB700million (or approximately US$111.27 million) (the “CMB Loan”). Also on April11, 2018, the registrant made an initial drawdown of RMB400million (or approximately US$63.58 million) (the “First Drawdown”) under the CMB Loan. Interest will accrue on the outstanding principal balance of the First Drawdown at a rate of 6% per year and will be payable quarterly on the 20th day of the last month of each calendar quarter. All outstanding principal of the First Drawdown will be due on April10, 2019.
The proceeds of the First Drawdown are being used by the registrant to repay in full the outstanding balance and all accrued and unpaid interest under credit agreements between the registrant and Ping An Bank Co., Ltd., a commercial bank with headquarters in the PRC, entered into on May19, 2017 and amended on September1, 2017. Upon Ping An Bank’s receipt of such payment in full, it will release an existing first lien that Ping An Bank holds on a building of the registrant in Beijing, China that is occupied primarily by the registrant’s subsidiary Sogou Inc. (“Sogou”) and in part by the registrant (the “Pledged Building”), and CMB will be granted a first lien on the Pledged Building to secure the CMB Loan.
Following Ping An Bank’s receipt of such repayment and CMB’s receipt of a first lien on the Pledged Building as described above, the registrant will be entitled to make drawdowns (each, a “Subsequent Drawdown”) of the CMB Loan from time to time up to a maximum aggregate amount of RMB300million (or approximately US$47.69million, with the last drawdown to be made no later than March22, 2021. The registrant and CMB will agree on the maturity date, the annual interest rate, the schedule of repayment of the outstanding principal, and the permitted use of the proceeds of each Subsequent Drawdown at the time of the drawdown. Interest accrued on the principal amount of Subsequent Drawdowns outstanding from time to time will be payable quarterly on the 20th day of the last month of each calendar quarter.
In connection with the CMB Credit Agreement, the registrant entered into an agreement (the “Commitment Letter”) with CMB to which the registrant has agreed that, in the event the registrant is unable to repay in full when due the outstanding principal amounts and accrued and unpaid interest of the CMB Loan, upon the request of CMB (i)the registrant will sell ordinary shares of the registrant’s majority-owned subsidiary Changyou.com Limited (“Changyou”) beneficially owned by the registrant, and make the net proceeds of such sale available for payment of the amounts of the CMB Loan that are then due and payable; and (ii)upon the request of CMB the registrant will cause Changyou to pay a cash dividend to Changyou’s shareholders, and will make the registrant’s share of any such dividend available for repayment of the CMB Loan.
The CMB Credit Agreement includes customary events of default, including the registrant’s failure to pay any portion of principal or interest when due; changes in business model and capital structure; other significant corporate events with respect to the registrant without prior written consent of CMB; and the failure of the registrant to perform its other obligations under the CMB Credit Agreement, including obligations with CMB’s first lien on the Pledged Building.
The registrant intends to use the proceeds of Subsequent Drawdowns under the CMB Loan to finance the registrant’s operations, excluding the operations of the registrant’s subsidiaries Changyou and Sogou.
The foregoing summary is not intended to be complete and is qualified in its entirety by reference to the CMB Credit Agreement (including related documents), English translations of which are filed herewith as Exhibits 10.1, 10.2, 10.3, and 10.4 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 Credit Facility Agreement, dated April11, 2018, between CMB and Beijing Sohu New Media Information Technology Co., Ltd. |
| 10.2 | English translation of Asset Pledge Agreement, dated April11, 2018, between CMB and Beijing Sohu New Era Information Technology Co., Ltd. |
| 10.3 | English translation of Asset Pledge Agreement, dated April11, 2018, between CMB and Beijing Sohu New Media Information Technology Co., Ltd. |
| 10.4 | English translation of Commitment Letter, dated April11, 2018, issued by the registrant to CMB. |
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, instability in global financial and credit markets and its potential impact on the Chinese economy; exchange rate fluctuations, including their potential impact on the Chinese economy and on the registrant’s reported US dollar results; recent slow-downs in the growth of the Chinese economy; the uncertain regulatory landscape in the People’s Republic of China; fluctuations in the registrant’s quarterly operating results; 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 registrant’s annual report on Form 10-K for the year ended December31, 2017, and other filings with the Securities and Exchange Commission.
SOHU COM INC ExhibitEX-10.1 2 d572326dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 Credit Facility Agreement (for working capital loan without signing a loan contract) No.: 2018 Bei Shou Zi No. 007 Grantor: Beijing North Third Ring Road Branch of China Merchants Bank Co.,…To view the full exhibit click here
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.
