Item 1.01 |
Entry into a Material Definitive Agreement. |
On December 6, 2022, MRC Global Inc. (the “Company”), certain subsidiaries of the Company, the Lenders (as defined below) and Bank of America, N.A., as administrative agent, security trustee and collateral agent (the “Administrative Agent”), entered into the First Amendment to Fourth Amended and Restated Loan, Security and Guarantee Agreement (the “Amendment”), which amends the Fourth Amended and Restated Loan, Security and Guarantee Agreement dated September 3, 2021, by and among the Company, as a guarantor, certain subsidiaries of the Company, as borrowers and guarantors, lenders party thereto (the “Lenders”) and the Administrative Agent (the “ABL Agreement”).
Prior to the effectiveness of the Amendment, the ABL Agreement included the London Interbank Offered Rate (“LIBOR”) as one of the interest rate benchmark options for U.S. dollar borrowings. However, on March 5, 2021, the Financial Conduct Authority, the regulatory supervisor of LIBOR’s administrator, announced in a public statement that the publication of one-week and two-month LIBOR maturities would cease immediately on December 31, 2021; and that the remaining maturities (3-month, 6-month and 12- month) would cease on or before June 30, 2023. The aforementioned 3-month, 6-month and 12- month U.S. dollar LIBOR maturities were each available to the borrowers under the ABL Agreement prior to the effectiveness of the Amendment.
Considering the announced discontinuation of LIBOR, a determination was made by the Administrative Agent and the Company to amend U.S. dollar denominated syndicated credit facilities to replace LIBOR with a new prevailing benchmark interest rate known as Term SOFR. “Term SOFR” is the forward-looking, per annum secured overnight financing rate administered by CME Group Benchmark Administration Limited and published on the applicable Thompson Reuters Corporation website page for each of 1-month, 3-month and 6-month maturities. As a result of this determination, the Company and the Administrative Agent have executed the Amendment to adopt Term SOFR as the new benchmark interest rate to replace LIBOR for U.S. dollar borrowings. The Amendment contains no other material changes to the terms of the ABL Agreement.
For a complete description of the terms of the Amendment, see the First Amendment to Fourth Amended and Restated Loan, Security and Guarantee Agreement, dated December 6, 2022, which has been filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference in this Item 1.01.