The foregoing description of the Indenture and the notes does not purport to be complete and is subject to, and is qualified in its entirety by, the full text of the Indenture and the form of the notes attached to this Current Report on Form 8-K as Exhibits 4.1 and 4.2, respectively, and incorporated herein by reference.
New Senior Secured Credit Facilities
On April 16, 2021, the Company and OSI, as co-borrowers (each, a “Borrower” and together, the “Borrowers”), certain lenders and Wells Fargo Bank, National Association, as administrative agent, entered into the Second Amended and Restated Credit Agreement, which provides for senior secured financing of a five-year $200.0 million term loan A and a five-year $800.0 million revolving credit facility (together, the “New Senior Secured Credit Facilities”). The New Senior Secured Credit Facilities replace the Company’s prior $1.5 billion credit facility among the Company and OSI, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (the “Prior Facility”).
The maturity date for the New Senior Secured Credit Facilities is April 16, 2026.
The commitments under the New Senior Secured Credit Facilities may be increased in an aggregate principal amount of up to (A) $425.0 million or (B) at the Borrower’s option, up to an unlimited amount of incremental facilities, so long as the Consolidated Senior Secured Net Leverage Ratio (as such term is defined in the Second Amended and Restated Credit Agreement) is no more than 3.00 to 1.00 as of the last day of the most recent period of four consecutive fiscal quarters ended.
The Borrowers may elect an interest rate for the New Senior Secured Credit Facilities at each reset period based on the Base Rate or the Eurocurrency Rate, plus an applicable spread. The Base Rate option will be the highest of: (i) the prime rate of Wells Fargo Bank, National Association, (ii) the federal funds effective rate plus 0.5 of 1.0% or (iii) the Eurocurrency rate with a one-month interest period plus 1.0% (the “Base Rate”). The Eurocurrency Rate option is the seven, 30, 60, 90 or 180-day Eurocurrency rate, subject to a floor of zero (“Eurocurrency Rate”). The rates under the New Senior Secured Credit Facilities will be 150 to 250 and 50 to 150 basis points above the Eurocurrency Rate and Base Rate, respectively, and letter of credit fees and fees for daily unused availability under the revolving credit facility will be 150 to 250 basis points and 25 to 40 basis points, respectively.
The term loan A will require scheduled quarterly amortization payments in aggregate annual amounts equal to 5.0% of the original principal amount of the term loan for the first, second and third years, 7.5% for the fourth year and 10.0% for the fifth year. These payments will be reduced by the application of any prepayments, and any remaining balance will be paid at maturity.
The New Senior Secured Credit Facilities contains mandatory prepayment requirements of 50% of the Company’s and its consolidated subsidiaries’ annual excess cash flow, as defined in the New Senior Secured Credit Facilities, commencing with the fiscal year ending December 25, 2022. The amount of outstanding loans required to be prepaid may vary based on the Borrower’s leverage ratio and year end results.
The terms of the New Senior Secured Credit Facilities, among other things, (1) require the Borrowers to comply with a specified quarterly Total Net Leverage Ratio covenant, with a maximum ratio of 5.00x for the quarterly period ending June 27, 2021 and 4.50x for the quarterly period ending September 26, 2021 and thereafter, (2) require the Borrowers to make certain prepayments, and limit, subject to certain exceptions, Borrowers’ ability and the ability of its subsidiaries to: incur additional indebtedness; make significant payments; sell assets; pay dividends and other restricted payments; make certain investments; acquire certain assets; effect mergers and similar transactions; and effect certain other transactions with affiliates, (3) prohibit Borrowers from paying certain dividends and making certain restricted payments and acquisitions until after September 26, 2021, and (4) limit capital expenditures to an aggregate of $200.0 million through December 26, 2021.
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