SECURITIES AND EXCHANGE COMMISSION
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 16, 2020 (June 16, 2020)
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction | | | | |
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction | | | | |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former name or former address if changed since last report)
Check the appropriate box below if the Form
8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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| | Common Stock, par value $0.01 per share | | | | |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2
of the Securities Exchange Act of 1934 (§
240.12b-2
of this chapter).
Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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In addition, the Notes are structurally subordinated to all of the existing and future liabilities and obligations (including trade payables, but excluding intercompany liabilities) of each of the Company’s
non-guarantor
subsidiaries.
The Notes are jointly and severally guaranteed on a senior secured second priority basis by certain of the Company’s existing and future U.S. direct or indirect restricted subsidiaries (other than Cartus Corporation, its subsidiaries and the
Co-Issuer)
that is a guarantor of its Existing Notes or under its senior secured credit facilities, or that incurs or guarantees certain other indebtedness in the future, subject to certain exceptions (the “Note Guarantors”), on a senior secured second priority basis by Intermediate and on an unsecured senior subordinated basis by Holdings.
On or after June 15, 2022, during the
12-month
period commencing on June 15 of the years set forth below, the Issuers may redeem all or a portion of the Notes at the following redemption prices, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
In addition, prior to June 15, 2022, the Issuers may redeem the Notes at their option, in whole or in part, at a redemption price equal to 100% of the principal amount of such Notes redeemed plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to June 15, 2022, the Issuers may redeem in the aggregate up to 40% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional Notes) with the net cash proceeds of one or more equity offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase capital stock (other than disqualified stock) of the Company from it, at a redemption price (expressed as a percentage of the principal amount thereof) of 107.625%, plus accrued and unpaid interest to, but not including, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date);
, that at least 50% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional Notes) remains outstanding after each such redemption;
, that such redemption shall occur within 90 days after the date on which any such equity offering is consummated upon not less than 30 nor more than 60 days’ notice mailed (or electronically transmitted) to each holder of Notes being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Any such redemption or notice may, at the Issuers’ discretion, be subject to one or more conditions precedent, including completion of an equity offering or other corporate transaction.
Upon the occurrence of a Change of Control, as defined in the Indenture, the Issuers must offer to repurchase the Notes at 101% of the applicable principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
The Indenture contains various covenants that limit the ability of Intermediate, the Company and the Company’s restricted subsidiaries to take certain actions, which covenants are subject to a number of important exceptions and qualifications. In addition, for so long as the Notes have an investment grade rating from both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. and no default has occurred and is continuing under the Indenture, the Company and its restricted subsidiaries will not be subject to certain of such covenants. These covenants include limitations on the Company’s and its restricted subsidiaries’ ability to (a) incur or guarantee additional indebtedness, or issue disqualified stock or preferred stock, (b) pay dividends or make distributions to its stockholders, (c) repurchase or redeem capital stock, (d) make investments or acquisitions, (e) incur restrictions on the ability of certain of its subsidiaries to pay dividends or to make other payments to the Company, (f) enter into transactions with affiliates, (g) create liens, (h) merge or consolidate with other companies or transfer all or substantially all of its assets, (i) transfer or sell assets, including capital stock of subsidiaries and (j) prepay, redeem or repurchase debt that is subordinated in right of payment to the Notes.
The covenants in the Indenture are substantially similar to the covenants in the indentures governing the Company’s 9.375% Senior Notes due 2027.
The Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Notes to become or to be declared due and payable.
New Intercreditor Agreement
On June 16, 2020, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent under both of the Company’s senior secured credit facilities, the Collateral Agent, the Company, Intermediate and the Note Guarantors entered into an intercreditor agreement (the “New Intercreditor Agreement”).
The New Intercreditor Agreement governs and defines the relative rights and priorities of the secured parties in respect of and amongst: (1) the liens in the Company’s, Intermediate’s and the Note Guarantors’ assets securing the first lien obligations under the senior secured credit facilities; (2) the liens in the Company’s, Intermediate’s and the Note Guarantors’ assets securing the second lien obligations under the Indenture; and (3) any future first and second lien indebtedness, and certain other matters relating to the administration of such liens. The New Intercreditor Agreement provides that the liens securing the second lien obligations will be junior and subordinate to the liens securing the first lien obligations.
Pursuant to the New Intercreditor Agreement, the agent representing the holders of the first lien obligations under the senior secured credit facilities, acting at the direction of the holders of the first lien obligations under the senior secured credit facilities, generally controls all matters related to the common collateral, including the ability to cause the commencement of enforcement proceedings against such common collateral.
The description of the New Intercreditor Agreement is qualified in its entirety by reference to the full and complete terms of the New Intercreditor Agreement which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
On June 16, 2020, the Company, Intermediate, the Note Guarantors and the Collateral Agent entered into a Collateral Agreement relating to the Notes (the “Collateral Agreement”).
Pursuant to the Collateral Agreement, the Notes will be secured by a lien on substantially all of the assets of the Company, Intermediate and the Note Guarantors (with certain exceptions).
The description of the Collateral Agreement is qualified in its entirety by reference to the full and complete terms of the Collateral Agreement which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
| Item 1.02. | Termination of a Material Definitive Agreement. |
The information set forth in Item 8.01 is incorporated by reference into this Item 1.02.
