| Item 1.01. | Entry into a Material Definitive Agreement. |
Amendment No. 1 to Credit Agreement
On May 5, 2022 (the “Amendment Closing Date”), the Company entered into Amendment No. 1 (the “Amendment”), to that certain unsecured revolving credit facility agreement with the lenders identified therein and JPMorgan Chase Bank, N.A., as the administrative agent, issuing bank and swingline lender thereunder dated as of July 1, 2021 (the “Existing Credit Agreement”; and together with the Amendment, the “Credit Agreement”). The Existing Credit Agreement provided the Company with senior unsecured revolving commitments in an aggregate principal amount of up to $750 million, with a letter of credit sub-facility of $40 million, with a swingline loan sub-facility of $25 million (the “Revolving Loan Facility”). Under the Existing Credit Agreement, the Revolving Loan Facility matured on July 1, 2026.
The Amendment amended the Existing Credit Agreement, to, among other things, (1) provide the Company with a new senior unsecured term loan A credit facility in the aggregate principal amount of $200 million (the “Term Loan Facility”) in addition to the Revolving Credit Facility that was established in the Existing Credit Agreement, (2) extend the maturity date of the Revolving Loan Facility to May 5, 2027 and provide that the Term Loan Facility matures on May 5, 2027 (the “Term Maturity Date”). The Credit Agreement also provides the Company with an uncommitted incremental facility in an aggregate principal amount of up to $375 million, which may take the form of revolving loans and/or term loans. The proceeds of the Loans (under and as defined in the Credit Agreement) will be used only to finance the working capital needs, and for general corporate purposes (including, without limitation, the repayment of outstanding Loans under the Existing Credit Agreement and the payment of fees under any Loan Document (including, without limitation, the Amendment), of the Borrower and its Subsidiaries including, without limitation, to finance working capital needs and to finance acquisitions and similar investments.
The Term Loan Facility was fully drawn on May 5, 2022 (the proceeds of the Term Loan Facility, the “Term Loans”) and is repayable in equal quarterly installments in an amount equal to 1.25% of the original principal amount of the Term Loans (such quarterly installment to begin on the first full fiscal quarter after the Amendment Closing Date), with the remaining principal balance due and payable on the Term Maturity Date. The Term Loans may be repaid in whole or in part, without premium or penalty, subject to prior written notice to the administrative agent.
Interest
Additionally, the Amendment amended the Existing Credit Agreement to establish customary SOFR provisions (which replaced the LIBOR provisions set forth in the Existing Credit Agreement) and provide that the Company may elect that the Loans comprising each borrowing bear interest at a rate per annum equal to either a base rate or SOFR rate, in each case, plus an Applicable Rate based on the Company’s senior unsecured long-term debt rating. The Credit Agreement also provides for a customary spread to be added to any Loan that is borrowed at the applicable SOFR rate. The Credit Agreement also contains customary benchmark replacement language.
Covenants
The Credit Agreement contains certain covenants that are substantially similar to the covenants in the Existing Credit Agreement and that, among other things, impose restrictions on the business of the Company and certain Subsidiaries, in each case, with certain exceptions, thresholds or caps that are permitted. The restrictions that these covenants place on the Company include, but are not limited to, limitations on their ability to:
| | • | | effectuate a Change of Control (as defined in the Credit Agreement); |
| | • | | consolidate or merge with or into any other Person; |
