| Item 1.01. | Entry into a Material Definitive Agreement. |
On February 7, 2024, Newell Brands Inc. (the “Company”), certain of its subsidiaries, as subsidiary borrowers (the “Subsidiary Borrowers”), and certain of its subsidiaries, as subsidiary guarantors, entered into a second amendment to the five-year revolving credit agreement (the “Second Amendment”) with a syndicate of banks led by JPMorgan Chase Bank, N.A., as Administrative Agent. The Second Amendment amends the Company’s existing revolving credit agreement, dated as of August 31, 2022, among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders party thereto (as amended, including by the Second Amendment, the “Revolving Credit Agreement”). Capitalized terms used herein shall have the meanings in the Revolving Credit Agreement.
The Second Amendment, among other things, (i) reduces the Commitments of the Lenders from $1.5 billion to $1 billion, (ii) replaces the Company’s existing Total Indebtedness to Total Capitalization and Interest Coverage Ratio financial covenants with new financial covenants testing the Company’s Collateral Coverage Ratio and Total Net Leverage Ratio (each as further described below), (iii) requires the Company and certain of the Company’s domestic and foreign subsidiaries (collectively, the “Guarantors”) to guarantee all obligations under the Revolving Credit Agreement including, without limitation, obligations in respect of extensions of credit to any of the Borrowers, certain hedging obligations, certain cash management obligations, and certain supply chain financing obligations (collectively, the “Secured Obligations”) and (iv) requires the Company and the other Guarantors to grant a lien and security interest in certain of its assets consisting of eligible accounts receivable, eligible inventory, eligible equipment and eligible intellectual property, and all products and proceeds of the foregoing (collectively, the “Collateral”).
The Total Net Leverage Ratio is defined as the ratio of (a) Consolidated Net Debt as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters ending on or most recently prior to such date. The maximum Total Net Leverage Ratio will be set at (i) 7.50:1.00 for the fiscal quarters ending March 31, 3024 through and including the fiscal quarter ending September 30, 2024, (ii) 7.25:1.00 for the fiscal quarters ending December 31, 2024 through and including the fiscal quarter ending June 30, 2025, (iii) 6.50:1.00 for the fiscal quarters ending September 30, 2025 through and including the fiscal quarter ending June 30, 2026, and (iv) 5.25:1.00 for the fiscal quarter ending September 30, 2026 and for each fiscal quarter ending thereafter during the term of the Revolving Credit Agreement.
The Collateral Coverage Test requires the Company to maintain a minimum ratio of Pledged Collateral Value to Total Revolving Credit Exposure of 1.05:1.00. The definition of Pledged Collateral Value sets forth the formula by which the value of the Collateral will be included for the Collateral Coverage Test, by reference to certain appraisal reports and, in the case of eligible inventory and eligible accounts receivable, the Company’s most recently delivered financial statements.
The foregoing summary of the Second Amendment is qualified in its entirety by reference to the Second Amendment, a copy of which is filed as Exhibit 10.1 hereto, and is incorporated herein by reference.
Some of the potential lenders under the Second Amendment and the Revolving Credit Agreement (and their respective subsidiaries or affiliates) have in the past provided, and may in the future provide, investment banking, underwriting, lending, commercial banking, trust and other advisory services to the Company and its subsidiaries and affiliates. These parties have received, and may in the future receive, customary compensation from the Company and its subsidiaries and affiliates for such services.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
