Item
2.03. Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
On April 25, 2017, Ventas Realty, Limited Partnership (“Ventas Realty”),
Ventas SSL Ontario II, Inc., Ventas SSL Ontario III, Inc., Ventas Canada
Finance Limited, Ventas UK Finance, Inc. and Ventas Euro Finance, LLC,
each of which is a direct or indirect wholly owned subsidiary of the
Company, as borrowers (collectively, the “Borrowers”), and the Company,
as guarantor, entered into a Second Amended and Restated Credit and
Guaranty Agreement (the “New Credit Agreement”), with the lenders
identified therein, Bank of America, N.A., as Administrative Agent and
Alternative Currency Fronting Lender, and Bank of America, N.A. and
JPMorgan Chase Bank, N.A., as Swing Line Lenders and L/C Issuers. The
New Credit Agreement provides for a $3.0 billion unsecured revolving
credit facility (the “Revolving Credit Facility”) and also evidences the
$200 million unsecured term loan facility maturing in 2018 (the “2018
Term Facility”) and the $800 million unsecured term loan facility
maturing in 2019, a portion of which is in the form of Canadian dollar
borrowings (the “2019 Term Facility”), which were, in each case,
originally provided for pursuant to the Existing Credit Agreement (as
defined below).
The New Credit Agreement replaces the Company’s existing unsecured
credit facility (which provided for, in part, a $2.0 billion unsecured
revolving credit facility) evidenced by that certain Amended and
Restated Credit and Guaranty Agreement, dated as of December 9, 2013, by
and among the Borrowers, the Company, as guarantor, the lenders
identified therein and Bank of America, N.A., as Administrative Agent,
Swing Line Lender, L/C Issuer and Alternative Currency Fronting Lender
(the “Existing Credit Agreement”).
Aggregate borrowing capacity under the New Credit Agreement may be
increased, at the Borrowers’ option, to up to $3.75 billion by
increasing the amount of the Revolving Credit Facility or by incurring
additional term loans, in each case subject to the satisfaction of
certain conditions set forth in the New Credit Agreement, including the
receipt of additional commitments for such increase.
The Revolving Credit Facility includes sublimits of (i) up to $200
million for letters of credit, (ii) up to $250 million for swingline
loans, (iii) up to $1.0 billion for loans in certain alternative
currencies, and (iv) up to 50% of the facility for certain negotiated
rate loans.
The Borrowers’ obligations under the New Credit Agreement are guaranteed
by the Company and rank equal in right of payment with all other senior
unsecured obligations of the Borrowers and the Company.
Borrowings outstanding under the New Credit Agreement bear interest at a
fluctuating rate per annum equal to the applicable LIBOR for
Eurocurrency rate loans and the higher of (i) the federal funds rate
plus 0.50%, (ii) the Administrative Agent’s prime rate and (iii) the
applicable LIBOR plus 1.0% for base rate loans, plus, in each case, a
spread based on Ventas Realty’s senior unsecured long-term debt ratings
(“Debt Ratings”). Negotiated rate loans pursuant to the New Credit
Agreement bear interest at the rate agreed to between the relevant
Borrower and the applicable lender. The Borrowers are also obligated to
pay an annual facility fee on the aggregate commitments under the
Revolving Credit Facility based on Ventas Realty’s Debt Ratings. Based
on Ventas Realty’s current Debt Ratings, the applicable spread is 0.875%
for Eurocurrency rate revolving loans, 1.05% for Eurocurrency rate term
loans, 0.00% for base rate revolving loans and 0.05% for base rate term
loans, and the facility fee is 15 basis points.
The Revolving Credit Facility matures on April 25, 2021, but may be
extended, at the Borrowers’ option, for up to two additional periods of
six-months each, subject to the satisfaction of certain conditions set
forth in the New Credit Agreement. The 2018 Term Facility matures on
January 31, 2018, and the 2019 Term Facility matures on January 31,
2019. Borrowings outstanding under the New Credit Agreement may be
repaid from time to time without premium or penalty, other than
customary breakage costs, if any, with respect to Eurocurrency rate
loans.
Except as set forth above, the terms of the New Credit
Agreement are substantially consistent with the terms of the Existing
Credit Agreement. In particular, the New Credit Agreement imposes
certain customary restrictions on the Borrowers, the Company and their
subsidiaries, including restrictions pertaining to: (i) liens;
(ii) investments; (iii) the incurrence of additional indebtedness;
(iv) mergers and dissolutions; (v) certain dividend, distribution and
other payments; (vi) permitted businesses; (vii) transactions with
affiliates; (viii) agreements limiting certain liens; and (ix) the
maintenance of certain consolidated total leverage, secured debt
leverage, unsecured debt leverage and fixed charge coverage ratios and
minimum consolidated adjusted net worth. The New Credit Agreement also
contains customary events of default. If a default occurs and is
continuing, the Borrowers may be required to repay all amounts
outstanding under the New Credit Agreement.
The foregoing description of the New Credit Agreement does not purport
to be complete and is qualified in its entirety by reference to the full
text of the New Credit Agreement, a copy of which will be filed with the
Company’s Quarterly Report on Form 10-Q for the three months ended March
31, 2017.
The representations, warranties and covenants contained in the New
Credit Agreement were made as of a specified date, may be subject to a
contractual standard of materiality different from what might be viewed
as material to investors, or may have been used for the purpose of
allocating risk between the parties. Accordingly, the representations
and warranties in the New Credit Agreement are not necessarily
characterizations of the actual state of facts about the Company, the
Borrowers and their subsidiaries at the time they were made or otherwise
and should be read only in conjunction with the other information that
the Company makes publicly available in reports, statements and other
documents filed with the Securities and Exchange Commission. Investors
are not third-party beneficiaries of, and should not rely upon, such
representations, warranties and covenants.