Item 1.01 Entry into a Material Definitive Agreement
On
its revolving credit agreement with a syndicate of banks signatory thereto and
“Sixth Amended and Restated Credit Agreement”) to extend the term and maintain
available revolving credit to serve
its subsidiaries and (b) entered into a two-year
agreement with a syndicate of banks signatory thereto and
“Term Loan Agreement” and together with the Sixth Amended and Restated Credit
Agreement, the “Credit Agreements”) to be used for general corporate purposes,
which may include acquisitions and the refinancing of indebtedness.
The total commitment under the Sixth Amended and Restated Credit Agreement is
Management of Canada Corporation
subsidiary of the Company, are co-borrowers under the Sixth Amended and Restated
Credit Agreement, and the Sixth Amended and Restated Credit Agreement permits
borrowing in Canadian dollars up to the
with such borrowings to be repaid in Canadian dollars. The Sixth Amended and
Restated Credit Agreement also contains a
The Company is the sole borrower under the Term Loan Agreement, which has a
maturity date of
subsidiary of the Company, guarantees all of the obligations under the Credit
Agreements.
The Credit Agreements contain customary representations and warranties and
affirmative and negative covenants. The Credit Agreements contain one financial
covenant, which sets forth a maximum total debt to consolidated earnings before
interest, taxes, depreciation and amortization (“EBITDA”) ratio. This covenant
provides that the ratio of the Company’s total debt to its EBITDA (the “Leverage
Ratio”) for the preceding four fiscal quarters will not be more than 3.75 to 1,
provided that if an acquisition permitted under the Credit Agreements involving
aggregate consideration in excess of
quarter, the Company shall have the right to increase the Leverage Ratio to 4.25
to 1 during such fiscal quarter and for the following three fiscal quarters (the
“Elevated Leverage Ratio Period”). There shall be no more than two Elevated
Leverage Ratio Periods during the term of the agreement, and the Leverage Ratio
must return to 3.75 to 1 for at least one quarter between Elevated Leverage
Ratio Periods. The calculation of all components used in the Leverage Ratio
covenant are as defined in the Credit Agreements. The Credit Agreements also
contain certain restrictions on the ability of the Company’s subsidiaries to
incur additional indebtedness as well as restrictions on the ability of the
Company and its subsidiaries to, among other things, incur liens, engage in
sale-leaseback transactions, and engage in mergers and consolidations.
The Credit Agreements contain customary events of default, including nonpayment
of principal when due; nonpayment of interest, fees or other amounts after a
stated grace period; inaccuracy of representations and warranties; violations of
covenants, subject in certain cases to negotiated grace periods; certain
bankruptcies and liquidations; a cross-default of more than
certain unsatisfied judgments of more than
events; and a change in control of the Company (as specified in the Credit
Agreements). If an event of default occurs and is continuing, the Company may be
required to repay all amounts outstanding under the Credit Agreements and
cash-collateralize any outstanding letters of credit supported by the Sixth
Amended and Restated Credit Agreement. The Agent, or the banks that hold more
than 50% of the commitments under the applicable Credit Agreement, may elect to
accelerate the maturity of all amounts due upon the occurrence and during the
continuation of an event of default.
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Under the Sixth Amended and Restated Credit Agreement, the Company is required
to pay, quarterly in arrears, (a) an annual facility fee in an amount ranging
from .04% to .10% per annum of the
borrowing availability under the agreement (the “Facility Fee”) and (b) letter
of credit fees, payable quarterly, in an amount ranging from .585% to 1.025% per
annum of outstanding letters of credit issued under the agreement (the “L/C
Fee”). Any borrowings in
Credit Agreement (other than borrowings under the swing line facility), as well
as borrowings under the Term Loan Agreement, will bear interest at a base rate
or the secured overnight financing rate as administered by the
Bank of New York
Loan”) plus, in the case of Term SOFR Loans, a credit adjustment spread of .10%
per annum, plus the applicable margin for base rate or Term SOFR Loans. Any
borrowings in Canadian dollars under the Sixth Amended and Restated Credit
Agreement will bear interest at a base rate or the Canadian Dollar Offered Rate
(“CDOR”) for the applicable interest period, plus the applicable margin. Any
borrowings under the swingline facility under the Sixth Amended and Restated
Credit Agreement will bear interest at a fluctuating rate per annum equal to the
one-month SOFR plus the applicable margin. In certain instances, the Agent may
approve a comparable or successor reference rate pursuant to the Credit
Agreements.
The applicable margin under both the Sixth Amended and Restated Credit Agreement
and the Term Loan Agreement, as well as the Facility Fee and L/C Fee under the
Sixth Amended and Restated Credit Agreement, depend on the Company’s senior
public debt rating, as determined by
Sixth Amended and Restated Credit Agreement, (a) the applicable margin for base
rate loans in
annum and (b) the applicable margin for Term SOFR Loans, CDOR loans and swing
line loans varies between .585% and 1.025% per annum. Under the Term Loan
Agreement, (a) the applicable margin for base rate loans is zero percent and
(b) the applicable margin for Term SOFR Loans varies between .5% and .9% per
annum. For purposes of the Sixth Amended and Restated Credit Agreement, based on
the Company’s current senior public debt rating, the Facility Fee is .07% per
annum; the L/C Fee is .805% per annum; the applicable margin for Term SOFR
Loans, swing line loans and CDOR loans is .805% per annum; and the applicable
margin for base rate loans is zero. For purposes of the Term Loan Agreement,
based on the Company’s current senior public debt rating, the applicable margin
for Term SOFR Loans is .7% per annum and the applicable margin for base rate
loans is zero.
After the effective date of the Credit Agreements, the Company, in consultation
with one or more banks selected by the Company to be the sustainability
coordinator under the applicable Credit Agreement (the “Sustainability
Coordinator”), will be entitled to establish specified key performance
indicators (“KPIs”) with respect to certain environmental, social and governance
targets of the Company and its subsidiaries. The Sustainability Coordinator, the
Company and the Agent may amend the applicable Credit Agreement, unless such
amendment is objected to by banks holding more than 50% of the commitments under
such Credit Agreement, solely for the purpose of incorporating the KPIs so that
certain adjustments to the otherwise applicable Facility Fee, L/C Fee or
interest rate may be made based on the Company’s performance against the KPIs.
Such adjustments may not exceed (a) a .01% increase or decrease in the otherwise
applicable rate for the Facility Fee or (b) a .04% increase or decrease in the
otherwise applicable rate for the L/C Fee, Term SOFR Loans, CDOR loans, swing
line loans and base rate loans.
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At closing, the Company had no outstanding borrowings under the Sixth Amended
and Restated Credit Agreement;
which are supported by the Sixth Amended and Restated Credit Agreement; and
Credit Agreement, leaving unused and available credit capacity of approximately
under the Term Loan Agreement with an interest rate of 1.7753% per annum.
Several of the banks that are party to the Credit Agreements, or their
affiliates, have in the past performed, and may in the future from time to time
perform, investment banking, financial advisory, lending, brokerage and/or
commercial banking services for the Company and its subsidiaries, for which they
have received, and may in the future receive, customary compensation and
reimbursement of expenses.
The Sixth Amended and Restated Credit Agreement is Exhibit 10.1 to this Current
Report on Form 8-K. The Term Loan Agreement is Exhibit 10.2 to this Current
Report on Form 8-K. The above description of the Credit Agreements is not
complete and is qualified in its entirety by reference to the applicable
exhibit.
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 under Item 1.01 above is incorporated herein by
reference as if fully set forth herein.
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