| Item 1.01 | Entry into a Material Definitive Agreement. |
On October 12, 2023, PowerSchool Holdings LLC (f/k/a Severin Holdings, LLC) (“Holdings”), Severin Acquisition, LLC (the “Top Borrower”), and PeopleAdmin, LLC (the “PA Borrower” and together with the Top Borrower, the “Borrowers”), each a subsidiary of PowerSchool Holdings, Inc. (the “Company”), entered into the Incremental and Refinancing Amendment No. 6 to the First Lien Credit Agreement (“Amendment No. 6”), by and among Holdings, the Borrowers, the subsidiaries of the Company party thereto (the “Subsidiary Guarantors”), Barclays Bank PLC, as the administrative agent (in such capacity, the “Administrative Agent”), and the banks, financial institutions and other entities referred therein as the “2023 Lenders.” Amendment No. 6 amends that certain First Lien Credit Agreement, dated as of August 1, 2018, by and among Holdings, the Borrowers, the Subsidiary Guarantors party thereto, the Administrative Agent, the lenders and other parties thereto (as amended, the “First Lien Credit Agreement”).
Pursuant to Amendment No. 6, the Borrowers (i) incurred term loans in an aggregate principal amount of approximately $838 million (the “2023 Refinancing Term Loans”), the proceeds of which were used by the Borrowers to refinance in full all of the term loans outstanding under the First Lien Credit Agreement (the “Existing Term Loans”), and (ii) incurred new revolving commitments in an aggregate principal amount of $400 million (the “2023 Refinancing Revolving Commitments”), which commitments refinanced in full the revolving commitments outstanding under the First Lien Credit Agreement (the “Existing Revolving Commitments”) and increased the amount of revolving commitments outstanding by $111 million. The 2023 Refinancing Term Loans and the 2023 Refinancing Revolving Commitments have substantially the same terms as the Existing Term Loans and the Existing Revolving Commitments, respectively, except that, pursuant to Amendment No. 6, (A) the 2023 Refinancing Term Loans will mature on the date that is two years after the original maturity date of the Existing Term Loans (such maturity date will be August 1, 2027), will amortize in quarterly installments of approximately $2,095,000 starting on March 31, 2024, and will have an interest rate, at the Borrowers’ option, based on a (1) prime rate, plus a margin ranging from 2.00% to 2.25%, based on Holdings’ consolidated first lien net leverage ratio (as defined in the First Lien Credit Agreement), or (2) the Secured Overnight Financing Rate (“SOFR”), plus a margin ranging from 3.00% to 3.25%, based on Holdings’ consolidated first lien net leverage ratio, and (B) the 2023 Refinancing Revolving Commitments will terminate on the date that is two years after the original termination date of the Existing Revolving Commitments (such maturity date will be May 2, 2027) and will have an interest rate, at the Borrowers’ option, based on a (1) prime rate, plus a margin ranging from 1.75% to 2.25%, based on Holdings’ consolidated first lien net leverage ratio, or (2) SOFR, plus a margin ranging from 2.75% to 3.25%, based on Holdings’ consolidated first lien net leverage ratio. Amendment No. 6 also includes a “soft call” premium of 1.00% for certain repricing transactions with respect to the 2023 Refinancing Term Loans that occur within the six-month period after the effective date of Amendment No. 6. The 2023 Refinancing Term Loans and the 2023 Refinancing Revolving Commitments are guaranteed by Holdings, each of the Borrowers (except with respect to its own obligations) and each of the Subsidiary Guarantors. The Borrowers, Holdings and the Subsidiary Guarantors have pledged substantially all of their assets as collateral for loans and other credit extensions under the First Lien Credit Agreement, including the 2023 Refinancing Term Loans and the 2023 Refinancing Revolving Commitments.
The foregoing description of Amendment No. 6 and the related 2023 Refinancing Term Loans and 2023 Refinancing Revolving Commitments does not purport to be complete and is subject to, and qualified in its entirety by, the full text of Amendment No. 6, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
