| Item 1.01. | Entry into a Material Definitive Agreement. |
On December 16, 2021, Hilton Grand Vacations Parent LLC (“Holdings”), Hilton Grand Vacations Borrower LLC (the “Borrower”), Hilton Grand Vacations Inc. (the “Company” or “HGV”), and certain subsidiaries of the Borrower (the “Subsidiary Guarantors”), entered into Amendment No. 1 to the Credit Agreement (the “Amendment”) which amended the Credit Agreement dated as of August 2, 2021 by and among the Company, Holdings, the Borrower, the Subsidiary Guarantors, Bank of America, N.A., as administrative agent and collateral agent, other financial institutions as lenders from time to time party thereto and the other parties thereto (the “Credit Agreement”), pursuant to which, among other things, the Borrower incurred revolving credit commitments of $1.0 billion (the “New Revolving Credit Facility”).
Proceeds from the New Revolving Credit Facility were used to repay in full the indebtedness outstanding under that certain Credit Agreement, dated as of December 28, 2016, as amended prior to the date hereof, among the Company, Holdings, the Borrower, the lenders party thereto from time to time, the other guarantors party thereto from time to time, and Bank of America, N.A., as administrative agent, collateral agent, L/C issuer and swing line lender (the “Prior Revolving Credit Facility”), which provided for a borrowing capacity of up to $800,000,000 and would have matured on November 28, 2023.
The New Revolving Credit Facility is subject to affirmative and negative covenants and events of default substantially the same as the initial term loans under the Credit Agreement. Additionally, certain financial covenants based on a consolidated first lien net leverage ratio and consolidated interest coverage ratio were added for the benefit of the New Revolving Credit Facility.
At the option of the Borrower, borrowings under the New Revolving Credit Facility will bear interest at either a base rate or at an annual rate equal to the London Interbank Offered Rate (“LIBOR”), for deposits with a corresponding term in U.S. dollars adjusted for applicable statutory reserve requirements plus, in each case, an applicable margin and subject to a 0% LIBOR floor. The applicable margin for the New Revolving Credit Facility will be determined based on a consolidated first lien net leverage ratio and will range from 0.75% to 1.25% per annum with respect to base rate borrowings, and 1.75% to 2.25% per annum with respect to the LIBOR borrowings. Additionally, the New Revolving Credit Facility requires a commitment fee in respect of unused commitments under the New Revolving Credit Facility that will be determined based on a consolidated first lien net leverage ratio and will range from 0.25% to 0.35% per annum.
The Borrower may voluntarily prepay the New Revolving Credit Facility (which prepayments may be reborrowed) at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans.
The New Revolving Credit Facility will mature on December 16, 2026.
