Item 1.01Entry into a Material Definitive Agreement.
On September 15, 2023, Enfusion, Inc. (the “Company”), Enfusion, Ltd. LLC, a controlled subsidiary of the Company (the “Borrower”), and certain other subsidiaries of the Company (together with the Company, the “Guarantors”) entered into a senior secured Credit Agreement (the “New Credit Agreement”) with Bank of America, N.A., as administrative agent, swing line lender and L/C issuer; and a syndicate of lending institutions from time to time party thereto (the “Lenders”).
The New Credit Agreement provides for a senior secured revolving loan facility in an aggregate principal amount of up to $100 million, including a $10 million sublimit for the issuance of letters of credit and a swingline subfacility of up to $10 million. The New Credit Agreement also has an uncommitted accordion feature that allows for up to $50 million of additional borrowing capacity, subject to obtaining lender commitments and the satisfaction of certain customary conditions. The New Credit Agreement matures on September 15, 2028.
Revolving loans under the New Credit Agreement will bear interest, at the Borrower’s option, at an annual rate benchmarked to (1) the Secured Overnight Financing Rate (“SOFR”) or (2) a “Base Rate” that is equal to the highest of (a) the federal funds rate plus 0.50%, (b) Bank of America’s prime rate and (c) one month adjusted term SOFR plus 1.00%. Loans based on SOFR bear interest at a rate equal to term SOFR for the applicable interest period plus 10 basis points plus a margin between 2.00% and 2.75%. Loans based on the Base Rate bear interest at a rate equal to the Base Rate plus a margin between 1.00% and 1.75% (such margins being referred to as the “Applicable Rate”). The Applicable Rate in each case is determined based on the Borrower’s Consolidated Net Leverage Ratio (as defined in the New Credit Agreement). The Borrower is also required to pay a commitment fee of between 0.20% and 0.25% per annum on the unused portion of the Lenders’ commitments, based on the Borrower’s Consolidated Net Leverage Ratio.
The New Credit Agreement requires periodic interest payments until maturity. For term SOFR loans, interest is payable on the last day of the applicable interest period, but at least every three months, and on the maturity date. For Base Rate loans, interest is payable on the last business day of March, June, September and December and on the maturity date. The Borrower may voluntarily prepay revolving loans and swing line loans or terminate the commitments under the revolving loan facility, in each case, at any time without premium or penalty (other than customary SOFR breakage costs).
The New Credit Agreement contains two financial covenants. The first financial covenant requires the Borrower’s Consolidated Net Leverage Ratio as of the end of any four fiscal quarter period to not exceed, (i) commencing with the fiscal quarter ending September 30, 2023 through and including September 30, 2024, 4:00:1.00 and (ii) commencing with the fiscal quarter ending December 31, 2024 and thereafter, 3.75:1:00; provided that the Consolidated Net Leverage Ratio may temporarily increase to 4.25:1.00 following a material acquisition. The second financial covenant prohibits the Borrower from having a Consolidated Interest Coverage Ratio (as defined in the New Credit Agreement) of less than 2.50:1.00 as of the last day of any four fiscal quarter period. The New Credit Agreement also contains customary representations and warranties, affirmative covenants, negative covenants and events of default. The negative covenants (subject, in each case, to certain exceptions) include, without limitation, restrictions on the ability of the Company and its subsidiaries’ to make, incur or enter into certain: liens, indebtedness, investments, fundamental changes, dispositions, restricted payments, and transactions with affiliates. Non-compliance with one or more of the aforementioned covenants or any other event giving rise to an event of default could result in the full or partial principal balance of the New Credit Agreement becoming immediately due and payable and the early termination of the Lenders’ commitments thereunder.
The obligations under the New Credit Agreement are secured by a lien on substantially all of the assets of the Company, Borrower and the other Guarantors, including a pledge of all of the equity interests of the Borrower and all other subsidiaries owned by the Borrower or a Guarantor, limited in the case of any foreign subsidiary or foreign subsidiary holding company to 65% of the voting capital stock and 100% of the non-voting capital stock of such subsidiary, subject to limited exceptions.
Certain of the agents and Lenders under the New Credit Agreement, or their affiliates (collectively, the “Lender Affiliates”), have provided, and may in the future provide, certain commercial banking, financial advisory, investment banking, and other financial services in the ordinary course of business to the Company or its affiliates (collectively, the “Borrower Affiliates”), for which such Lender Affiliates may receive customary fees. The Borrower Affiliates have provided and may in the future provide investment management software or related services to the Lender Affiliates in the ordinary course of business, and may receive customary fees in return.
