| Item 1.01 | Entry into a Material Definitive Agreement. |
On October 26, 2018, Heidrick & Struggles International, Inc. (the “Company”) and certain foreign subsidiary borrowers of the Company (together with the Company, the “Borrowers”) entered into a Credit Agreement (the “Credit Agreement”) with institutions from time to time party thereto as lenders (the “Lenders”), Bank of America, N.A., as Administrative Agent, SunTrust Bank, as Syndication Agent, and HSBC Bank USA, National Association, as Documentation Agent. The Credit Agreement provides the terms under which the Lenders will make available to the Borrowers a committed unsecured revolving credit facility in an aggregate amount of $175 million, which includes a sublimit of $25 million for letters of credit and a sublimit of $10 million for swingline loans (the “Facility”). The Credit Agreement includes an expansion feature that allows the Company to seek to increase the aggregate commitment under the Facility by up to $75 million, provided that the Company is in compliance with certain conditions precedent set forth in the Credit Agreement. The Facility matures on October 26, 2023.
Under the Credit Agreement, the Borrowers may borrow in U.S. dollars, Euros, British Pound Sterling, Australian dollars or other lawful currency that is readily available and freely transferable and convertible into U.S. dollars for which a LIBOR Screen Rate is available as agreed by the Lenders. Loans comprising each ABR Borrowing under the Credit Agreement bear interest at the Alternate Base Rate plus a spread as determined by the Company’s leverage ratio. Loans comprising each Eurocurrency Borrowing under the Credit Agreement bear interest at the Adjusted LIBO Rate for the interest period plus a spread as determined by the Company’s leverage ratio. In addition, the Company will pay a commitment fee equal to the Applicable Rate times the actual daily amount by which the aggregate commitments exceed the sum of (i) the outstanding principal amount of revolving loans and (ii) an amount equal to the sum of the aggregate undrawn dollar amount of all outstanding letters of credit plus the aggregate dollar amount of payments made by lenders pursuant to outstanding letters of credit. Borrowings under the Credit Agreement may be repaid and reborrowed, or the Lenders’ commitments reduced at any time without premium or penalty, subject to customary breakage fees.
Borrowings under the Credit Agreement may be used for working capital, capital expenditures, Permitted Acquisitions, Restricted Payments and for other general corporate purposes of the Company and its subsidiaries. The obligations under the Credit Agreement are guaranteed by certain of the Company’s subsidiaries.
The Credit Agreement contains customary affirmative and negative covenants, as well as customary events of default. The Credit Agreement requires that the Company not permit the consolidated interest coverage ratio to be less than the level set forth in the Credit Agreement, and the leverage ratio to exceed the level set forth in the Credit Agreement.
The Credit Agreement replaces the Company’s $100 million Second Amended and Restated Credit Agreement, originally dated as of June 22, 2011, as amended and restated as of January 31, 2013, and as further amended and restated as of June 30, 2015, which was terminated on October 26, 2018 (the “Terminated Agreement”).
Some of the Lenders that are parties to the Credit Agreement, including their predecessors and affiliates, have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending and/or commercial banking services for the Company and its subsidiaries, pursuant to which such Lenders have received, and may in the future receive, customary compensation and reimbursement of expenses.
The description above is a summary of the Credit Agreement and is qualified in its entirety by the complete text of the Credit Agreement, a copy of which is attached to this report as Exhibit 10.1 and incorporated herein by reference. Capitalized terms not defined herein have the meanings given to them in the Credit Agreement.
| Item 1.02 | Termination of a Material Definitive Agreement. |
The information set forth above under Item 1.01 regarding the Terminated Agreement is hereby incorporated by reference into this Item 1.02.
