Item 1.01. Entry into a Material Definitive Agreement.
On September 19, 2019, KAR Auction Services, Inc. (the “Company”) entered into a Third Amendment Agreement (the “Third Amendment”) to the Amended and Restated Credit Agreement, dated as
of March 11, 2014 (as amended by that certain Incremental Commitment Agreement and First Amendment, dated March 9, 2016, as amended by that certain Incremental Commitment Agreement and Second Amendment, dated May 31, 2017, and as further amended by
the Third Amendment, the “Credit Agreement”), by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, certain subsidiaries of the Company party thereto and the several lenders and issuing lenders party thereto.
The Third Amendment provides for, among other things, (i) the refinancing of the existing tranche B-4 term loans and tranche B-5 term loans with new seven-year tranche B-6 term loans (the “Tranche
B-6 Term Loans”) in an aggregate principal amount of $950,000,000, (ii) repayment of all existing revolving loans and (iii) a five-year revolving credit facility in an aggregate principal amount of $325,000,000 (the “Revolving Facility”),
which refinances the previously existing revolving credit facility under the Credit Agreement. The Revolving Facility also includes a $50 million sub-limit for issuance of letters of credit and a $60 million sublimit for swing line loans, which can
be borrowed on same-day notice.
As set forth in the Credit Agreement, the Tranche B-6 Term Loans will bear interest at an adjusted LIBOR rate plus 2.25% or at the Company’s election, Base Rate (as defined in the Credit Agreement)
plus 1.25%. Loans under the Revolving Facility will bear interest at a rate calculated based on the type of borrowing (either adjusted LIBOR or Base Rate) and the Company’s Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit
Agreement), with such rate ranging from 2.25% to 1.75% for adjusted LIBOR loans and from 1.25% to 0.75% for Base Rate loans. The Company will also pay a commitment fee between 25 to 35 basis points, payable quarterly, on the average daily unused
amount of the Revolving Facility based on the Company’s Consolidated Senior Secured Net Leverage Ratio, from time to time.
The Credit Agreement contains affirmative and negative covenants that are usual and customary for a senior secured credit agreement. The negative covenants include, among other things, limitations on
asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with the Company’s affiliates. The Credit Agreement also requires the Company to maintain a maximum Consolidated Senior Secured Net Leverage Ratio
not to exceed 3.50 to 1.00 as of the last day of each fiscal quarter (commencing with December 31, 2019) on which any loans under the Revolving Facility are outstanding.
Certain of the lenders and agents and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking, commercial
banking and other services for the Company and its affiliates, for which they received or will receive customary fees and expenses.
The foregoing description of the Third Amendment is qualified in its entirety by reference to the full text of the Third Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K
and which is incorporated herein by reference.