Item 1.01.
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Entry into a Material Definitive Agreement.
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On September 20, 2017, Mattel, Inc.
(Mattel) entered into Amendment No. 2 (the Amendment) to the Seventh Amended and Restated Credit Agreement (the Credit Facility), by and among Mattel, as borrower, Bank of America, N.A., as Administrative
Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Citigroup Global Markets Inc., as Joint Lead Arrangers and Joint Bookrunners, Wells Fargo Bank, N.A. and Citibank N.A., as
Co-Syndication
Agents, Mizuho Corporate Bank, Ltd., MUFG Union Bank, N.A., and Royal Bank of Canada, as
Co-Documentation
Agents, and the other financial institutions party
thereto.
The Amendment amends the Credit Facility to remove the consolidated debt to Consolidated EBITDA ratio requirement for the third fiscal quarter
of 2017, and increase the consolidated debt to Consolidated EBITDA ratio that Mattel is required to maintain during a Covenant Modification Period to 4.50 to 1.00 for the fourth fiscal quarter of 2017 and 4.25 to 1.00 for each fiscal quarter
thereafter. The definition of Consolidated EBITDA has also been amended to
add-back
extraordinary, unusual,
non-recurring,
or
one-time
cash expenses, losses, and charges not to exceed $275,000,000. The Covenant Modification Period commences upon September 20, 2017 and continues, at a minimum, through the fourth fiscal quarter of
2017 and thereafter until such time as Mattel (i) requests the termination of the Covenant Modification Period, and (ii) delivers financial statements and a certificate to the lenders demonstrating a consolidated debt to Consolidated
EBITDA ratio of 3.75 to 1.00 or less for the period consisting of the preceding four consecutive fiscal quarters.
The Amendment further amends the Credit
Facility to, among other items, (a) add certain restrictive covenants during the Covenant Modification Period that include greater restrictions against certain receivable financing facilities, as well as restrictions on certain asset
dispositions, burdensome agreements and specified restricted payments, (b) add a Guarantee and Lien Trigger Event that occurs if Mattels debt rating falls below certain thresholds, (c) add covenants that require all U.S. Material
Subsidiaries under the Credit Facility (other than foreign subsidiary holding companies) to become Guarantors upon a Guarantee and Lien Trigger Event, and (d) provide that after a Guarantee and Lien Trigger Event and before the termination of
the Covenant Modification Period, indebtedness under the Credit Facility in an amount not to exceed 10% of Mattels Consolidated Net Tangible Assets will be secured by pledges from Mattel and the Guarantors of 100% of the equity of all U.S.
Subsidiaries (other than any foreign subsidiary holding company) and 66% of the equity of all first-tier foreign subsidiaries and foreign subsidiary holdings companies. Such guarantees and pledges, as well as the additional restrictive covenants,
will be eliminated upon the termination of the Covenant Modification Period.
Many of the lenders party to the Credit Facility and their respective
affiliates have various banking arrangements with Mattel in the ordinary course of business, for which they receive customary fees and expenses.
The
foregoing summary of the Amendment is qualified in its entirety by reference to the actual text of the Amendment, a copy of which is filed herewith as Exhibit 10.1.