| Item 1.01. | Entry into a Material Definitive Agreement. |
On July 23, 2020, Choice Hotels International, Inc. (the “Company”) closed its sale of $450 million aggregate principal amount of its 3.700% Senior Notes due 2031 (the “Senior Notes”).
The Senior Notes were issued pursuant to a Fourth Supplemental Indenture, dated as of July 23, 2020, between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”) to the indenture dated as of August 25, 2010 (together, the “Indenture”) between the Company and the Trustee.
The Senior Notes bear interest at the fixed rate of 3.700% per year and mature on January 15, 2031. Interest on the Senior Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2021. The interest rate payable on the Senior Notes will be subject to adjustment based on certain rating events. The Company may redeem the Senior Notes, in whole or in part, at any time prior to their maturity at the redemption price described in the Indenture, which includes a make-whole premium. If the Senior Notes are redeemed on or after October 15, 2030 (three months prior to the applicable maturity date), the redemption price will be equal to 100% of the principal amount of the Senior Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. Additionally, at the option of the holders of the Senior Notes, the Company may be required to repurchase all or a portion of the Senior Notes of a holder upon the occurrence of a change of control event, as defined in the Indenture, at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
The Indenture provides, among other things, that the Senior Notes will be senior unsecured obligations of the Company and rank equal in right of payment to all of the Company’s existing and future unsecured debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Senior Notes.
The Indenture imposes certain limitations on the ability of the Company and its restricted subsidiaries, as defined in the Indenture, to create or incur liens and to enter into sale and leaseback transactions. The Indenture also imposes certain limitations on the ability of the Company to merge or consolidate with or into any other person (other than a merger of a subsidiary into the Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of the property of the Company in any one transaction or series of related transactions.
The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others: nonpayment of principal or interest, breach of covenants or other agreements in the Indenture, defaults in or failure to pay certain other indebtedness, and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the Trustee or the holders of at least 25% in principal amount of the then outstanding Senior Notes may declare the principal of and accrued interest and premium (if any) on all of the Senior Notes to be due and payable immediately.
Other material terms of the Senior Notes and the Indenture are more fully described in the prospectus supplement, dated July 9, 2020 and filed with the Securities and Exchange Commission (the “Commission”) on July 10, 2020, to the accompanying prospectus filed with the Commission on May 14, 2020, as part of a Registration Statement on Form S-3 (File No. 333-238256). The foregoing description of the terms of the Senior Notes does not purport to be complete and is qualified in its entirety by reference to the Indenture, which is filed as Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on August 25, 2010 and the Fourth Supplemental Indenture, which is filed as Exhibit 4.1 hereto and incorporated herein by reference.
The Company and its subsidiaries maintain ordinary banking and commercial relationships with the Trustee and its affiliates, for which they receive customary fees.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of the Registrant. |
The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
