| Item 1.01. | Entry into a Material Definitive Agreement. |
On December 15, 2022, Universal Corporation (the “Company”) entered into a new Credit Agreement, with JPMorgan Chase Bank, N.A., as Administrative Agent, Truist Bank and AgFirst Farm Credit Bank, as Co-Syndication Agents and First Horizon Bank, KeyBank National Association and Citibank, N.A., as Co-Documentation Agents (the “Credit Agreement”). The Credit Agreement provides for (i) a five-year term loan A-1 facility in the amount of $275,000,000 (the loans thereunder, the “Term A-1 Loans”), (ii) a seven-year term loan A-2 facility in the amount of $345,000,000 (the loans thereunder, the “Term A-2 Loans”) and (iii) a five-year revolving loan facility (the “Revolving Credit Facility”) of $530,000,000 (the loans thereunder, the “Revolving Credit Loans” and, collectively with the Term A-1 Loans and the Term A-2 Loans, the “Loans”), of which up to $25,000,000 is available for letters of credit and, at the swingline lender’s discretion, up to $20,000,000 is available for short-term borrowings on a swingline basis. The Credit Agreement also provides that the Company may, at its option, increase the aggregate amount of the Revolving Credit Facility and/or obtain incremental term loans in an amount up to $200,000,000 without the consent of any lenders not participating in such increase, subject to certain customary conditions and lenders committing to provide the increase in funding. There can be no assurance that additional funding will become available. The Company’s obligations under the Credit Agreement are unsecured. Commitments under the Revolving Credit Facility are subject to a facility fee of 0.25% to 0.40% depending upon the Company’s ratio of consolidated total indebtedness to consolidated EBITDA (each as defined in the Credit Agreement).
Loans designated by the Company at the time of borrowing as “ABR Loans” that are outstanding under the Credit Agreement bear interest at a rate per annum equal to (i) the greatest of (a) the Prime Rate (as defined in the Credit Agreement) in effect on such day; (b) the NYFRB Rate (as defined in the Credit Agreement) in effect on such day plus 1/2 of 1%; and (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) for a one-month interest period as published two business days prior to such day plus 1%; plus (ii) the Applicable Rate (as defined below). Loans designated by the Company at the time of borrowing as “Term Benchmark Loans” that are outstanding under the Credit Agreement bear interest at a rate per annum equal to the Adjusted Term SOFR Rate (as defined in the Credit Agreement) for the interest period in effect for such borrowing plus the Applicable Rate. The “Applicable Rate” means (i) with respect to Revolving Credit Loans, a percentage ranging from 0.25% to 0.85% per annum for ABR Loans and a percentage ranging from 1.25% to 1.85% per annum for Term Benchmark Loans, (ii) with respect to Term A-1 Loans, a percentage ranging from 0.50% to 1.25% per annum for ABR Loans and a percentage ranging from 1.50% to 2.25% per annum for Term Benchmark Loans and (iii) with respect to Term A-2 Loans, a percentage ranging from 0.75% to 1.75% for ABR Loans and a percentage ranging from 1.75% to 2.75% per annum for Term Benchmark Loans, in each case depending upon the Company’s ratio of consolidated total indebtedness to consolidated EBITDA (each as defined in the Credit Agreement). Under the terms of the Credit Agreement, accrued interest on each Loan is payable in arrears on the applicable interest payment date for each Loan. As of the effective date, and until such time as the Company delivers to the Administrative Agent the financial statements for the fiscal quarter ending on or about March 31, 2023, the Applicable Rate shall be the following rates per annum: (i) 0.65% with respect to Revolving Credit Loans that are ABR Loans, (ii) 1.65% with respect to Revolving Credit Loans that are Term Benchmark Loans, (iii) 1.00% with respect to Term A-1 Loans that are ABR Loans, (iv) 2.00% with respect to Term A-1 Loans that are Term Benchmark Loans, (v) 1.25% with respect to Term A-2 Loans that are ABR Loans, and (vi) 2.25% with respect to Term A-2 Loans that are Term Benchmark Loans. The Loans under the Credit Agreement may be prepaid at any time without premium or penalty (other than any accrued interest or breakage costs, if applicable). The Company expects that the proceeds from the Credit Agreement will be used for general corporate purposes, including prepayment of existing indebtedness, and to provide general working capital.
The Credit Agreement contains customary affirmative and negative covenants, including limitations on mergers, consolidations and sales of assets, limitations on liens and sales and leasebacks,
