INTRODUCTORY NOTE
On September 20, 2021, StepStone Group Inc., a Delaware corporation (the “Company”) and StepStone Group LP, a Delaware limited partnership (the “Partnership”), completed their previously announced acquisition (the “Greenspring Acquisition”) of Greenspring Associates, Inc., a Delaware corporation (“GA Inc.”) and Greenspring Back Office Solutions, Inc., a Delaware corporation (“GBOS Inc.” and together with GA Inc., “Greenspring”) pursuant to the Transaction Agreement, dated July 7, 2021, by and among Greenspring, the Partnership, the Company, certain wholly-owned subsidiaries of the Company, sellers party thereto (the “Sellers”) and Shareholder Representative Services, LLC, solely in its capacity as the initial Seller Representative (the “Transaction Agreement”).
The aggregate consideration paid by the Company and the Partnership in the Greenspring Acquisition to the former equityholders of Greenspring (the “Sellers”) was approximately (1) $185 million in cash, (2) 12,686,756 shares of the Class A Common Stock of the Company and (3) 3,071,519 Class C Units of the Partnership, each of which is exchangeable into one share of Class A Common Stock, in each case subject to certain adjustments (including customary adjustments for cash, debt, debt-like items, transaction expenses and net working capital at closing) (collectively, the “Transaction Consideration”).
The cash portion of the Transaction Consideration was financed under a revolving credit facility entered into on September 20, 2021 by the Company and the Partnership, with JPMorgan Chase Bank, N.A., acting as an administrative agent and collateral agent, and certain other lenders party thereto.
The Transaction Agreement also provides for the payment of up to $75 million of additional cash consideration as an earnout payment to the Sellers, which shall be payable in 2025 subject to achievement by Greenspring of certain management fee revenue targets for the calendar year 2024.
The Class A Common Stock of the Company and Class C Units of the Partnership issued at the closing of the Greenspring Acquisition are not registered under the Securities Act of 1933, as amended (the “Securities Act”), or other applicable securities laws, in reliance upon the exemption set forth in Section 4(a)(2) under the Securities Act. Shares of Class A Common Stock of the Company issuable upon exchange of the Class C Units of the Partnership will be issued in reliance upon the exemption set forth in Sections 3(a)(9) and 4(a)(2) under the Securities Act.
| Item 1.01. | Entry into a Material Definitive Agreement. |
Credit Agreement
In connection with the Greenspring Acquisition, the Company entered into a Credit Agreement, dated as of September 20, 2021, among the Company, as initial borrower, the Partnership, as subsequent borrower (the “Subsequent Borrower”), JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and certain other lenders party thereto (the “Credit Agreement”). The Credit Agreement provides a $225,000,000 multicurrency revolving credit facility with a five year maturity and includes a sub-facility for the issuance of letters of credit in an amount not to exceed $10,000,000. The Company incurred loans under the Credit Agreement concurrently with the closing of the Greenspring Acquisition to fund the cash portion of the Transaction Consideration. Immediately following such incurrence and the closing of the Greenspring Acquisition, the Company assigned all of its rights and obligations under the Credit Agreement to the Subsequent Borrower and was automatically released of any such rights and obligations (the “Borrower Assignment”). Following such Borrower Assignment, the Subsequent Borrower will be the sole borrower under the Credit Agreement and may at any time incur revolving loans under the Credit Agreement for the purpose of financing general corporate purposes.
The Credit Agreement contains customary events of default, as a result of which the debt may be accelerated, including defaults for a failure to pay interest when due, breaches of financial covenants, insolvency events, or breaches of other covenants under the Credit Agreement.
The foregoing summary does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Credit Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
