Item 1.01. Entry into a Material Definitive Agreement
On March 12, 2019, The ServiceMaster Company, LLC (the “Company”), an indirect wholly owned subsidiary of ServiceMaster Global Holdings, Inc. (“ServiceMaster”), entered into a credit agreement (the “Short Term Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and certain other financial institutions party thereto, providing for a $600 million term loan facility (the “Short Term Credit Facility”). The Company borrowed $600 million under the Short Term Credit Facility on March 12, 2019. The Company expects to use the proceeds of such borrowing to repay principal, interest, or premium on the term loans under the Company’s amended and restated credit agreement, dated as of November 8, 2016, among the Company, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and issuing bank, the lenders and other financial institutions party thereto (the “Existing Credit Agreement”), and for general corporate purposes. The Company expects to repay the Short Term Credit Facility pursuant to a debt-for-equity exchange agreement, which, if entered into and effected, would require the Company to transfer certain shares of common stock of frontdoor, inc. (“Frontdoor”), retained in connection with ServiceMaster’s previously completed spin-off of Frontdoor, to Chase Lincoln First Commercial Corporation to repay and retire the Company’s obligations under the Short Term Credit Facility.
The Short Term Credit Facility will mature on May 11, 2019. CDRSVM Holding, LLC, the direct parent of the Company, and each direct and indirect domestic subsidiary of the Company that guarantees the Existing Credit Agreement guarantee the Company’s obligations under the Short Term Credit Agreement. The Short Term Credit Agreement contains affirmative and negative covenants that are substantially similar to the affirmative and negative covenants in the Existing Credit Agreement. The interest rates applicable to the loans under the Short Term Credit Facility are based on a fluctuating rate of interest measured by reference to either, at the borrower’s option, (i) an adjusted London inter-bank offered rate (“LIBOR”) plus 2.50% per annum, or (ii) an alternate base rate plus 1.50% per annum. Prior to maturity on May 11, 2019, the Company may prepay term loans under the Short Term Credit Facility at any time and from time to time, in whole or in part, without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans. There is no required amortization under the Short Term Credit Facility. The Short Term Credit Agreement provides for certain customary events of default which, if any of them occurs, would permit or require the loans under the Short Term Credit Facility to be declared due and payable.
The foregoing description of the Short Term Credit Facility is qualified in its entirety by reference to the complete terms and conditions of the Short Term Credit Agreement, filed as Exhibit 10.1 hereto and incorporated herein by reference.