Item 1.01 Entry into a Material Definitive Agreement.
On July 9, 2021, Alliance Data Systems Corporation, as the borrower (the “Company”), and certain of the Company’s subsidiaries entered into a Seventh Amendment to Amended and Restated Credit Agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and the lenders party thereto (the “Seventh Amendment”), which amended the Amended and Restated Credit Agreement dated as of June 14, 2017, among the Company, certain of the Company’s subsidiaries, as guarantors, Wells Fargo and the other lenders party thereto (including Wells Fargo, the “Lenders”) (as amended, supplemented or otherwise modified prior to the Seventh Amendment, the “Credit Agreement” and as further amended by the Seventh Amendment, the “Amended Credit Agreement”). The Seventh Amendment, among other things, (i) provides consent by the Lenders to the spin-off or sale of the Company’s LoyaltyOne business in one or more transactions (each such spin-off or sale, a “LoyaltyOne Divestiture”) and certain related transactions, (ii) extends the maturity date of the revolving loans and approximately 86% of the term loans under the Credit Agreement from December 31, 2022 to July 1, 2024, (iii) revises the interest rates and commitment fees to be charged in connection with the loans and the method of determining each, (iv) modifies the financial and operational covenants and certain other provisions in the Credit Agreement to reflect the Company’s business and operations after giving effect to the LoyaltyOne Divestitures, (v) requires a prepayment of certain of the loans in an amount equal to the net proceeds from the LoyaltyOne Divestitures, including any net proceeds from debt that is distributed to the Company and (vi) adds Lon Inc. and Lon Operations LLC as additional guarantors.
Borrowings under the Amended Credit Agreement bear interest at a per annum rate that is equal to a base rate (which is equal to the highest of the prime rate, the Federal Funds effective rate plus 0.50%, and 1-month LIBOR plus 1.0%) or LIBOR, in each case plus the applicable margin. After giving effect to the Seventh Amendment, (i) the applicable margin ranges from 0.375% to 1.000% per annum in the case of the alternate base rate, and from 1.375% to 2.000% per annum in the case of LIBOR, in each case based on the pricing level, and (ii) the commitment fee ranges from 0.200% to 0.350% per annum on the daily average unused revolving credit commitments, based on the pricing level. The pricing level depends on the ratio of (a) the Consolidated Tangible Net Worth (as defined in the Amended Credit Agreement) to (b) the Consolidated Total Assets (as defined in the Amended Credit Agreement) minus the sum of intangible assets (net) and goodwill.
The description of the Seventh Amendment herein is qualified in its entirety by reference to the full text of such Seventh Amendment, a copy of which is attached as Exhibit 10.1 hereto and incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 above is incorporated herein by reference.
