Item 1.01
|
Entry Into a Material Definitive Agreement
|
Company Senior Facilities
General
On the Closing Date, in
connection with the Outerwall Merger, the Company assumed Outerwall Merger Subs obligations under:
|
|
|
a first lien credit agreement, dated as of the Closing Date, by and among Aspen Intermediate, LLC, a Delaware limited liability company, Outerwall Merger Sub, the lenders party thereto and Bank of America, N.A., as
administrative agent, which provides for senior secured financing of up to $635 million consisting of:
|
|
|
|
a first lien term loan facility (the Company First Lien Term Loan Facility), in an aggregate principal amount of $560 million, with a maturity of seven years; and
|
|
|
|
a first lien revolving credit facility (the Company Revolving Credit Facility and, together with the Company First Lien Term Loan Facility, the Company First Lien Facilities), in an aggregate
principal amount of up to $75 million, with a maturity of five years, including a letter of credit sub-facility; and
|
|
|
|
a second lien credit agreement, dated as of the Closing Date, by and among Outerwall Merger Sub, the lenders party thereto and Bank of America, N.A., as administrative agent, which provides for senior secured financing
of up to $135 million consisting of a second lien term loan facility (the Company Second Lien Term Loan Facility and, together with the Company First Lien Facilities, the Company Senior Facilities), with a maturity of eight
years.
|
In addition, the Company may request one or more incremental term loan facilities under the Company First Lien Term Loan Facility or
the Company Second Lien Term Loan Facility and/or increase commitments under the Company Revolving Credit Facility in an aggregate amount of up to the sum of (x) $100 million plus (y) an additional amount if the Company satisfies certain
leverage ratios, subject to certain conditions and receipt of commitments by existing or additional lenders. Proceeds of the term loans drawn on the Closing Date were used to finance a portion of the transactions contemplated by the Merger
Agreement, including the consummation of the Mergers, the repayment in full of the Credit Facility (defined in Item 1.02), the consummation of the Tender Offers (defined in Item 1.02) and, to the extent not tendered pursuant to the Tender
Offers, the redemption and discharge of the Remaining Notes (defined in Item 1.02) (collectively, the Transactions), and to pay fees and expenses incurred in connection therewith. Proceeds of the revolving loans drawn after the
Closing Date and letters of credit will be used for working capital and general corporate purposes.
Interest Rates and Fees
Borrowings under the Company Senior Facilities will bear interest at a rate equal to, at the option of the Company, either (a) a LIBOR
rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.00% floor in the case of term loans or (b) a base rate
determined by reference to the highest of (i) the federal funds rate plus 0.50% per annum, (ii) the prime rate quoted by Bank of America, N.A. and (iii) the one-month adjusted LIBOR plus 1.00% per annum, in each case plus an
applicable margin. The applicable margin for borrowings under the Company First Lien Term Loan Facility is 4.25% with respect to LIBOR borrowings and 3.25% with respect to base rate borrowings. The initial applicable margin for borrowings under the
Company Revolving Credit Facility is 4.50% with respect to LIBOR borrowings and 3.50% with respect to base rate borrowings. After the delivery of financial statements in respect of the first full fiscal quarter completed after the Outerwall Merger,
the applicable margin for borrowings under the Company Revolving Credit Facility is subject to one step-down if the Company satisfies a certain net first lien net leverage ratio. The applicable margin for borrowings under the Company Second Lien
Term Loan Facility is 8.75% with respect to LIBOR borrowings and 7.75% with respect to base rate borrowings.
In addition to paying
interest on outstanding principal under the Company Senior Facilities, the Company is required to pay a commitment fee at a rate equal to 0.50% per annum to the lenders under the Company Revolving Credit Facility in respect of the unutilized
commitments thereunder. The applicable commitment fee under the Company Revolving Credit Facility may be subject to one step-down if the Company satisfies a certain net first lien leverage ratio. The Company is also required to pay customary agency
fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR rate borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of
credit issuers customary documentary and processing fees and charges and a fronting fee computed at a rate equal to 0.125% per annum on the daily stated amount of each letter of credit.
Amortization and Prepayments
The Company
First Lien Term Loan Facility requires scheduled quarterly amortization payments on the term loan in annual amounts equal to 1.0% of the original principal amount of the term loan, with the balance paid at maturity.
In addition, the Company Senior Facilities require the Company to prepay outstanding term loan borrowings, subject to certain exceptions,
with:
|
|
|
a certain percentage set forth in the credit agreements governing the Company Senior Facilities of the Companys annual excess cash flow, as defined under the Company Senior Facilities;
|
|
|
|
a certain percentage of the net cash proceeds of certain non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and reinvestment rights;
and
|
|
|
|
the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the Company Senior Facilities.
|
The Company may voluntarily repay outstanding loans under the Company First Lien Facilities at any time, without prepayment premium or
penalty, except in connection with a repricing event as described below, subject to customary breakage costs with respect to LIBOR rate loans. Any refinancing through the issuance or repricing amendment of any broadly syndicated
long-term secured loans that results in a repricing event applicable to the term loans under the Company First Lien Term Loan Facility resulting in a lower yield occurring at any time during the first six months after the Closing Date will be
accompanied by a 1.00% prepayment premium.
The Company may voluntarily repay outstanding loans under the Company Second Lien Term Loan
Facility at any time, without prepayment premium or penalty, except as described below, subject to customary breakage costs with respect to LIBOR rate loans. The Company is required to pay a prepayment premium in connection with any
voluntary repayment of term loans under the Company Second Lien Term Loan Facility with the net cash proceeds of any issuance of debt as follows: 2.00% if such term loans are prepaid within the first year after the Closing Date and 1.00% if such
term loans are prepaid within the second year after the Closing Date.
Collateral and Guarantors
All obligations under the Company Senior Facilities are unconditionally guaranteed by each of the Companys existing and future direct and
indirect material, wholly owned domestic subsidiaries, subject to certain exceptions, and, in the case of the Company First Lien Term Loan Facility, the direct parent of the Company on a limited recourse basis. The obligations are secured by a
pledge of substantially all of the Companys assets and those of each subsidiary guarantor, including capital stock of the subsidiary guarantors and 65% of the capital stock of the first-tier foreign subsidiaries that are not subsidiary
guarantors, in each case subject to certain exceptions, and, in the case of the Company First Lien Term Loan Facility, the Companys capital stock. Such security interests consist of (a) in the case of the Company First Lien Term Loan
Facility, a first-priority lien with respect to the collateral and (b) in the case of the Company Second Lien Term Loan Facility, a second-priority lien with respect to the collateral.
Restrictive Covenants and Other Matters
The Company Revolving Credit Facility requires that the Company, after an initial grace period and subject to a testing threshold, comply on a
quarterly basis with a maximum net first lien leverage ratio of 5.90 to 1.00. The testing threshold will be satisfied at any time at which the sum of outstanding revolving loans and certain letters of credit under the Company Revolving Credit
Facility exceeds 30% of the outstanding commitments under the Company Revolving Credit Facility at such time. The Company Second Lien Term Loan Facility does not contain a financial covenant.
The Company Senior Facilities contain certain customary affirmative covenants and events of default. The negative covenants in the Company
Senior Facilities include, among other things, limitations (none of which are absolute) on the ability of the Company and its subsidiaries to:
|
|
|
incur additional debt or issue certain preferred shares;
|
|
|
|
create liens on certain assets;
|
|
|
|
make certain loans or investments (including acquisitions);
|
|
|
|
pay dividends on or make distributions in respect of its capital stock or make other restricted payments;
|
|
|
|
consolidate, merge, sell or otherwise dispose of all or substantially all of its assets;
|
|
|
|
enter into certain transactions with its affiliates;
|
|
|
|
enter into sale-leaseback transactions;
|
|
|
|
change its lines of business;
|
|
|
|
restrict dividends from its subsidiaries or restrict liens;
|
|
|
|
change its fiscal year; and
|
|
|
|
modify the terms of certain debt or organizational agreements.
|
Redbox Senior Facilities
General
On the Closing Date, in
connection with the Redbox Merger, Redbox assumed Redbox Merger Subs obligations under a first lien credit agreement, dated as of the Closing Date, by and among Redwood Intermediate, LLC, a Delaware limited liability company, Redbox Merger
Sub, the lenders party thereto, and Jefferies Finance LLC, as administrative agent, which provides for senior secured financing of up to $440 million consisting of:
|
|
|
a first lien term loan facility (the Redbox Term Loan Facility), in an aggregate principal amount of $400 million, with a maturity of five years; and
|
|
|
|
a first lien revolving credit facility (the Redbox Revolving Credit Facility and, together with the Redbox Term Loan Facility, the Redbox Senior Facilities), in an aggregate principal amount of
up to $40 million, with a maturity of four and a half years, including a letter of credit sub-facility.
|
In addition, Redbox may request one or more incremental term loan facilities and/or increase commitments under
the Redbox Revolving Credit Facility in an aggregate amount of up to the sum of (x) $50 million plus (y) an additional amount if Redbox satisfies certain leverage ratios, subject to certain conditions and receipt of commitments by existing
or additional lenders. Proceeds of the term loans drawn on the Closing Date were used to finance a portion of the Transactions and to pay fees and expenses incurred in connection therewith. Proceeds of the revolving loans drawn after the Closing
Date and letters of credit will be used for working capital and general corporate purposes.
Interest Rates and Fees
Borrowings under the Redbox Senior Facilities will bear interest at a rate equal to, at the option of Redbox, either (a) a LIBOR rate
determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.00% floor in the case of term loans or (b) a base rate determined by
reference to the highest of (i) the federal funds rate plus 0.50% per annum, (ii) the prime rate quoted by The Wall Street Journal (or another national publication selected by the administrative agent) and (iii) the one-month
adjusted LIBOR plus 1.00% per annum, in each case plus an applicable margin. The applicable margin for borrowings under the Redbox Senior Facilities is 7.50% with respect to LIBOR borrowings and 6.50% with respect to base rate borrowings.
In addition to paying interest on outstanding principal under the Redbox Senior Facilities, Redbox is required to pay a commitment fee at a
rate equal to 0.50% per annum to the lenders under the Redbox Revolving Credit Facility in respect of the unutilized commitments thereunder. The applicable commitment fee under the Redbox Revolving Credit Facility may be subject to one
step-down if Redbox satisfies a certain net first lien leverage ratio. Redbox is also required to pay customary agency fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR rate
borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuers customary documentary and processing fees and charges and a fronting fee computed at a rate equal to
0.125% per annum on the daily stated amount of each letter of credit.
Amortization and Prepayments
The Redbox Term Loan Facility requires scheduled quarterly amortization payments on the term loan in annual amounts as follows: 17.5% of the
original principal amount of the term loan for the first four fiscal quarters after the Closing Date and 15.0% of the original principal amount of the term loan thereafter, with the balance paid at maturity. Commencing with the end of the fiscal
year ending December 31, 2017, the Redbox Revolving Credit Facility requires scheduled quarterly commitment reductions in annual amounts equal to 5.0% of the original principal amount of the commitments under the Revolving Credit Facility, with
the remaining commitments terminated at maturity.
In addition, the Redbox Senior Facilities require Redbox to prepay outstanding term
loan borrowings, subject to certain exceptions, with:
|
|
|
a certain percentage set forth in the credit agreement governing the Redbox Senior Facilities of Redboxs annual excess cash flow, as defined under the Redbox Senior Facilities;
|
|
|
|
a certain percentage of the net cash proceeds of certain non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and reinvestment rights;
and
|
|
|
|
the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the Redbox Senior Facilities.
|
Redbox may voluntarily repay outstanding loans under the Redbox Senior Facilities at any time, without prepayment premium or penalty, except
in connection with a repricing event as described below, subject to customary breakage costs with respect to LIBOR rate loans. Any refinancing through the issuance or repricing amendment of any debt that results in a repricing event
applicable to the term loans resulting in a lower yield occurring at any time during the first twelve months after the Closing Date will be accompanied by a 1.00% prepayment premium or fee, as applicable.
Collateral and Guarantors
All obligations under the Redbox Senior Facilities are unconditionally guaranteed by each of the Companys existing and future direct and
indirect material, wholly owned domestic subsidiaries, subject to certain exceptions, and the direct parent of Redbox on a limited recourse basis. The obligations are secured by a pledge of substantially all of Redboxs assets and those of each
subsidiary guarantor, including capital stock of the subsidiary guarantors and 65% of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to certain exceptions, and Redboxs capital
stock. Such security interests consist of a first-priority lien with respect to the collateral.
Restrictive Covenants and Other Matters
The Redbox Revolving Credit Facility requires that Redbox, after an initial grace period, comply on a quarterly basis with a maximum net total
leverage ratio of 2.50 to 1.00, with one step-down to 2.00 to 1.00 on December 31, 2018.
The Redbox Senior Facilities contain
certain customary affirmative covenants and events of default. The negative covenants in the Redbox Senior Facilities include, among other things, limitations (none of which are absolute) on the ability of Redbox and its subsidiaries to:
|
|
|
incur additional debt or issue certain preferred shares;
|
|
|
|
create liens on certain assets;
|
|
|
|
make certain loans or investments (including acquisitions);
|
|
|
|
pay dividends on or make distributions in respect of its capital stock or make other restricted payments;
|
|
|
|
consolidate, merge, sell or otherwise dispose of all or substantially all of its assets;
|
|
|
|
enter into certain transactions with its affiliates;
|
|
|
|
enter into sale-leaseback transactions;
|
|
|
|
change its lines of business;
|
|
|
|
restrict dividends from its subsidiaries or restrict liens;
|
|
|
|
change its fiscal year; and
|
|
|
|
modify the terms of certain debt or organizational agreements.
|
Certain Relationships
The lenders under the Company Senior Facilities and Redbox Senior Facilities and their respective affiliates have in the past engaged, and may
in the future engage, in transactions with and perform services, including commercial banking, financial advisory and investment banking services, for the Company and its affiliates in the ordinary course of business for which they have received or
will receive customary fees and expenses.
Item 1.02
|
Termination of a Material Definitive Agreement
|
Third Amended and Restated Credit Agreement
On the Closing Date, the Company prepaid its indebtedness under and terminated its Third Amended and Restated Credit Agreement
(the Credit Facility), dated as of June 24, 2014 (as amended, restated, supplemented or otherwise modified prior to the Closing Date), by and among the Company, the lenders party thereto from time to time and Bank of America, N.A.,
as administrative agent. In connection with the termination, the Company repaid all of the outstanding obligations in respect of principal, interest and fees under the Credit Facility.
6.00% Senior Notes due 2019 and 5.875% Senior Notes due 2021
In connection with the Mergers, on August 25, 2016, Outerwall Merger Sub commenced tender
offers (the Tender Offers) to purchase for cash any and all of the Companys outstanding 6.00% Senior Notes due 2019 (the 2019 Notes) issued pursuant to an indenture dated March 12, 2013 among the Company, the
subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee (the 2019 Notes Indenture) and 5.875% Senior Notes due 2021 (the 2021 Notes and, together with the 2019 Notes, the Notes)
issued pursuant to an indenture dated June 9, 2014 among the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (the 2021 Notes Indenture and, together with the 2019 Notes Indenture, the
Indentures). On the date hereof, $246,578,000 aggregate principal amount of 2019 Notes were purchased in the applicable Tender Offer, leaving $74,036,000 aggregate principal amount of 2019 Notes outstanding (the Remaining 2019
Notes), and $225,618,000 aggregate principal amount of 2021 Notes were purchased in the applicable Tender Offer, leaving $2,980,000 aggregate principal amount of 2021 Notes outstanding (the Remaining 2021 Notes and, together with
the Remaining 2019 Notes, the Remaining Notes).
On the Closing Date, following the purchase of the tendered 2019 Notes and
2021 Notes in the Tender Offers, at the direction of the Company, the applicable trustee for the Remaining Notes delivered notices of redemption (the Redemption Notices) to the holders of the Remaining Notes. The Redemption Notices
provide for the Companys redemption of the Remaining Notes on October 27, 2016 (the Redemption Date) at the applicable redemption price set forth in the applicable Indenture. The Company satisfied and discharged its
obligations under the Indentures on the Closing Date by depositing with the applicable trustee for the Remaining Notes funds sufficient to pay the applicable redemption prices on the Redemption Date.
All information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.02.