Item 1.01
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Entry into a Material Definitive Agreement.
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On July 24, 2018, Patterson Dental Supply, Inc. (the
Originator), as servicer, a wholly owned subsidiary of Patterson Companies, Inc. (Patterson), entered into a Receivables Purchase Agreement (the Receivables Purchase Agreement) with (1) PDC Funding Company
III, LLC (PDC III), a special purpose entity that is wholly owned by the Originator, as seller, (2) purchasers from time to time party thereto (collectively, the Purchasers), and (3) MUFG Bank, Ltd., as agent. In
addition, on that same date, the Originator and PDC III entered into a Receivables Sale Agreement (the Receivables Sale Agreement). Together, the Receivables Purchase Agreement and the Receivables Sale Agreement establish the terms and
conditions of an accounts receivable securitization program (the Receivables Securitization Program) whereby the Originator sells, or contributes in exchange for equity, all of its trade receivables and certain related rights to payment
and obligations of Originator with respect to such receivables and certain related rights (the Receivables) to PDC III, which, in turn, sells the Receivables to Purchasers.
Pursuant to the Receivables Securitization Program, a portion of the purchase price for the Receivables is paid by the Purchasers in cash and the balance is
treated as a deferred purchase price receivable, which is paid as and when payments in respect of the Receivables are collected from account debtors. The purchase price paid by the Purchasers for the Receivables arising under the Receivables
Securitization Program will not exceed $200 million outstanding at any time. The Purchasers under the Receivables Securitization Program receive yield on their investments based on a spread over the commercial paper rate for conduit purchasers
and the LIBOR rate for bank purchasers, for each day that their investments in the Receivables are outstanding, as well as a fee calculated on the unused portion of the commitments.
The Receivables Securitization Program contains certain customary representations and warranties and affirmative and negative covenants, including as to the
eligibility of the Receivables being sold, as well as customary reserve requirements, Receivables Securitization Program termination events, Originator termination events and servicer defaults. The Receivables Securitization Program termination
events permit the Purchasers to terminate the Receivables Purchase Agreement upon the occurrence of certain specified events, including, but not limited to, failure by PDC III to pay amounts when due, defaults on indebtedness, certain judgments, a
change of control, certain events negatively affecting the overall credit quality of transferred Receivables and bankruptcy and insolvency events.
Originator will act as servicer of the Purchaser Receivables and will receive a fee for its services. Patterson has entered into a performance undertaking
pursuant to which it has agreed to guarantee the payment and performance of PDC IIIs obligations under the Receivables Sale Agreement and Originators obligations as servicer under the Receivables Purchase Agreement.
The Receivables Securitization Program terminates on July 23, 2019; provided, however, that such date may be extended from time to time at the discretion
of the Purchasers at the request of PDC III.
The proceeds from the sale of Receivables pursuant to the Receivables Securitization Program will be used to
repay higher interest indebtedness and for other general corporate purposes.
The foregoing description of the Receivables Securitization Program is not
complete and is qualified in its entirety by the actual terms of the Receivables Purchase Agreement and the Receivables Sale Agreement, copies of which are attached hereto as Exhibit 10.1 and 10.2, respectively, and are incorporated herein by
reference.