| Item 1.01 | Entry into a Material Definitive Agreement. |
Senior Loan Facilities
On December 1, 2021 (the “Closing Date”), CDW LLC, an Illinois limited liability company (“CDW”) entered into a new five-year $1,420.0 million senior unsecured term loan facility (the “Term Loan Facility”). The terms of the Term Loan Facility are set forth in the Credit Agreement, dated as of December 1, 2021, by and among CDW, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the joint lead arrangers, joint bookrunners, co-syndication agents and co-documentation agents party thereto (the “New Term Loan Agreement”). The New Term Loan Agreement replaces CDW’s existing senior secured term loan agreement, the Amended and Restated Term Loan Credit Agreement, dated as of April 17, 2016, by and among CDW, the other parties thereto from time to time as guarantors, the lenders from time to time party thereto, and Barclays Bank PLC, as administrative agent (as amended, modified or supplemented from time to time, the “Prior Term Loan Agreement”).
Also on the Closing Date, CDW entered into a new five-year $1,600.0 million senior unsecured revolving loan facility (the “Revolving Loan Facility” and together with the Term Loan Facility, the “Senior Loan Facilities”). The terms of the Revolving Loan Facility are set forth in the Revolving Credit Agreement, dated as of December 1, 2021, by and among CDW, CDW Finance Holdings Limited (the “UK Borrower”), the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Wells Fargo Commercial Distribution Finance, LLC, as floorplan funding agent, and the joint lead arrangers, joint bookrunners, co-syndication agents and co-documentation agents party thereto (the “New Revolving Loan Agreement”). The New Revolving Loan Agreement replaces CDW’s existing senior secured revolving loan agreement, the Third Amended and Restated Revolving Loan Credit Agreement, dated as of March 26, 2021, by and among CDW, the UK Borrower, the other parties thereto from time to time as a borrower or guarantor, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties from time to time party thereto (as amended, modified or supplemented from time to time, the “Prior Revolving Loan Agreement” and, together with the Prior Term Loan Agreement, the “Prior Facility Agreements”).
The Revolving Loan Facility consists of: (a) a U.S. Dollar tranche available to CDW only in U.S. Dollars and (b) a multicurrency tranche (the “Multicurrency Tranche”; and the loans thereunder, the “Multicurrency Loans”) available to CDW and the UK Borrower in U.S. Dollars, Euros and Sterling. Borrowings (as defined in the New Revolving Loan Agreement) by the UK Borrower are subject to a sub-cap of $250.0 million of Multicurrency Loans, which amount may be increased by up to $50.0 million in connection with a revolving commitment increase (as defined in the New Revolving Loan Agreement).
Borrowings (as defined in the New Term Loan Agreement and the New Revolving Loan Agreement, as applicable) under the Senior Loan Facilities denominated in U.S. Dollars bear interest at either (a) the alternate base rate (“ABR”) plus a margin or (b) LIBOR plus a margin; provided that for the purposes of the Senior Loan Facilities, LIBOR shall not be less than 0.00% per annum at any time. The margin for all Borrowings is based upon CDW’s senior unsecured rating. Applicable margins under the Senior Loan Facilities range (i) for ABR borrowings, from 0.00% to 0.750% and (ii) for LIBOR borrowings, from 1.00% to 1.750%.
Each Senior Loan Facility matures in 2026. Commencing with the fiscal quarter ending March 31, 2022, the loans under the Term Loan Facility amortize in equal quarterly installments payable at the end of the applicable calendar quarter at (i) a per annum rate of 2.5% of the aggregate principal amount of the Term Loan Facility for the first four fiscal quarters and (ii) a per annum rate of 5.0% of the aggregate principal amount of the Term Loan Facility for the each quarter thereafter. The Revolving Loan Facility has no amortization.
The Senior Loan Facilities contain a maximum total net leverage ratio (as defined in the New Term Loan Agreement or the New Revolving Loan Agreement, as applicable) covenant set at 4.50:1.00, with one step down to 4.00:1.00 from and after the fifth fiscal quarter ending after the Closing Date; provided that to the extent that CDW has maintained a total net leverage less than or equal to 4.00:1.00 for two consecutive quarters prior to a qualified acquisition (as defined in the New Term Loan Agreement or the New Revolving Loan Agreement, as applicable), following the consummation of such a qualified acquisition after December 31, 2022, the Borrower may elect to increase the total net leverage ratio to 4.50:1:00 for the next 4 consecutive fiscal quarters (including the quarter in which such qualified acquisition was consummated). Such step ups in connection with qualified acquisitions are limited to twice per the term of the respective Senior Loan Facility.
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