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Item 1.01
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Entry into a Material Definitive Agreement.
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Issuance of 5.750% Senior Notes due 2025
On September 21, 2017 (the “Effective Date”), LPL Holdings, Inc. (“LPL Holdings”), a wholly owned subsidiary of LPL
Financial Holdings Inc. (the “Company”), completed the issuance and sale of $400 million aggregate principal amount of 5.750% Senior Notes due 2025 (the “Notes”). The Notes were issued as an
add-on
to the $500 million aggregate principal amount of 5.750% senior notes due 2025 that were previously issued by LPL Holdings pursuant to an Indenture dated March 10, 2017, among LPL Holdings,
U.S. Bank National Association as trustee, and certain subsidiaries of LPL Holdings as guarantors (the “Indenture”). The Notes carry a yield to worst of 5.115%. In addition to paying down a portion of the existing Term Loan B, LPL Holdings
expects to use the net proceeds from the Notes offering for general corporate purposes, including to fund a portion of a contingent payment (if any such amount becomes payable) in connection with the previously announced acquisition by its
subsidiary, LPL Financial LLC, of certain assets and rights from National Planning Holdings, Inc. and its four broker-dealer subsidiaries, and to pay fees and expenses related to the offering of the Notes.
The Notes are unsecured obligations of LPL Holdings, will mature on September 15, 2025 and will bear interest at the rate of 5.750% per
year, with interest payable semi-annually on March 15 and September 15 of each year, beginning on March 15, 2018. LPL Holdings may redeem all or part of the Notes at any time prior to March 15, 2020 (subject to a customary
“equity claw” redemption right) at 100.000% of the principal amount redeemed plus any accrued and unpaid interest thereon and a “make-whole” premium. Thereafter LPL Holdings may redeem all or part of the Notes at annually
declining redemption premiums until March 15, 2023, at and after which date the redemption price will be equal to 100.000% of the principal amount redeemed plus any accrued and unpaid interest thereon.
The foregoing description of the Notes is qualified in its entirety by reference to the Indenture as well as the first supplemental indenture
relating thereto, a copy of which is filed as Exhibit 4.1 to this Current Report on
Form 8-K.
Senior
Secured Credit Facilities
On the Effective Date, LPL Holdings entered into a second amendment (the “Amendment”) to its
amended and restated credit agreement, dated as of March 10, 2017, among LPL Holdings, the Company, JPMorgan Chase Bank, N.A., as administrative agent, swing-line lender and letter of credit issuer, and the lenders and the other parties party
thereto from time to time (as amended by the amendment agreement, dated as of June 20, 2017, the “Existing Credit Agreement”, and as further amended by the Amendment, the “Credit Agreement”).
Pursuant to the Amendment, the Existing Credit Agreement was amended to, among other changes, (i) reduce the spread on the Term Loan B to
225 basis points above LIBOR from a spread of 250 basis points above LIBOR, (ii) reduce the spread on the revolving credit facility to a range of 125 basis points to 175 basis points over LIBOR from a spread of 150 basis points to 200 basis
points over LIBOR, in each case, depending on the secured net leverage ratio of LPL Holdings and its restricted subsidiaries, (iii) extend the maturity of the revolving credit facility to the fifth anniversary of the Effective Date and
(iv) extend the maturity of the Term Loan B to the seventh anniversary of the Effective Date. In connection with the Amendment, LPL Holdings paid down $200.0 million of the existing Term Loan B. The new Term Loan B will be
subject to a 1.00% prepayment fee in connection with any voluntary prepayments of any principal of the new Term Loan B that constitute a Repricing Transaction (as defined in the Credit Agreement).
The foregoing description of the Amendment is qualified in its entirety by reference to the copy thereof filed as Exhibit 10.1 to this
Current Report on
Form 8-K.