ITEM 1.01
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Third Amended and Restated Credit Agreement
On October 27, 2016 (the Closing Date), Virtu Financial LLC (Virtu Financial), a subsidiary of Virtu Financial Inc. (the Company) and VFH Parent LLC (the Borrower), a subsidiary of Virtu Financial, entered into a Third Amended and Restated Credit Agreement (the Amended Credit Agreement), with the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, lead arranger and bookrunner and BMO Capital Markets Corp., as syndication agent. The Amended Credit Agreement amends and restates in its entirety the Borrowers existing credit agreement.
Under the Amended Credit Agreement, (i) the Borrowers existing term loan facility was replaced by a senior secured first lien term loan in an aggregate principal amount of $540.0 million, drawn in its entirety on the Closing Date, and (ii) the Borrowers existing senior secured first lien revolving facility with aggregate commitments of $100.0 million remains in effect. As of the date hereof, the Borrower did not have any outstanding principal balance on the revolving credit facility.
The term loan borrowings under the Amended Credit Agreement will bear interest, at our election, at either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate plus 0.5%, (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1% and (d) 1.75%, plus, in each case, 2.50%, or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 0.75%, plus, in each case, 3.50%. Prior to the Amended Credit Agreement, the Borrowers term loan borrowings bore interest, at our election, at either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate plus 0.5%, (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1% and (d) 2.25%, plus, in each case, 3.0%, or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) 1.25%, plus, in each case, 4.0%. Revolver borrowings under the Amended Credit Agreement will bear interest, at our election, at either (i) the greatest of (a) the prime rate in effect, (b) the federal funds effective rate plus 0.5%, (c) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1% and (d) 1.0%, plus, in each case, 2.0%, or (ii) the greater of (x) an adjusted LIBOR rate for the interest period in effect and (y) zero, plus, in each case, 3.0%. In addition a commitment fee accrues at a rate of 0.50% per annum on the average daily unused amount of the revolving facility and is payable quarterly in arrears.
The senior secured credit facility under the Amended Credit Agreement is subject to certain financial covenants, which require the Borrower to maintain specified financial ratios and tests, including interest coverage and total leverage ratios, which may require the Borrower to take action to reduce its debt or to act in a manner contrary to its business objectives. The senior secured credit facility is also subject to certain negative covenants that restricts the Borrowers ability to, among other things, incur additional indebtedness, dispose of assets, guarantee debt obligations, repay other indebtedness, pay dividends, pledge assets, make investments, including in certain of our operating subsidiaries, make acquisitions or consummate mergers or consolidations and engage in certain transactions with subsidiaries and affiliates. The Borrower is also subject to contingent principal payments based on excess cash flow and certain other triggering events.
Borrowings under the Amended Credit Agreement are secured by substantially all of the Borrowers assets, other than the equity interests in and assets of its subsidiaries that are subject to, or potentially subject to, regulatory oversight, and its foreign subsidiaries, but including 100% of the non-voting stock and 65% of the voting stock of these subsidiaries.
Under the Amended Credit Agreement term loans will mature on the sixth anniversary of the Closing Date and revolving commitments will terminate and outstanding revolving loans will mature on April 15, 2018, subject in each case to certain exceptions and permitted extensions as set forth in the Amended Credit Agreement.
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