Item
1.01
.
Entry in
to a Material Definitive Agreement
.
Credit Agreement
On
May 9, 2019
, i3 Ve
rticals, LLC, a Delaw
are
limited liability company (the “Borrower”
), entered into that certain Amended and Restated Credit Agreement (the “Amended and Restated Agreement”) with the guarantors and lenders party thereto and Bank of America, N.A., as administrative agent (“Bank of America”), which amends and restates that certain Credit Agreement, dated as of October 30, 2017, among the Borrower, the guarantors and lenders party thereto and Bank of America, as administrative agent. The Amended and Restated Credit Agreement provides for aggregate commitments of $300 million in the form of a senior secured revolving credit facility (the “Revolver”).
The Amended and Restated Agreement provides that the Borrower has the right to seek additional commitments to provide additional term loan facilities or additional revolving credit commitments in an aggregate principal amount up to $50 million so long as, among other things, after giving pro forma effect to the incurrence of such additional borrowings and any related transactions, the Borrower’s consolidated interest coverage ratio
(
as defined in the Amended and Resta
ted Credit Agreement)
would not be less than 3.00 to 1.0 and the Borrower’s consolidated senior leverage ratio
(as defined in the Amended and Restated Credit Agreement)
would not exceed
the ratios reflected in the schedule below, based on the applicable quarter and calendar year:
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Calendar Year
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March 31
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June 30
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September 30
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December 31
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2019
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N/A
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3.75 to 1.0
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3.75 to 1.0
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3.75 to 1.0
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2020
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3.75 to 1.0
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3.75 to 1.0
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3.75 to 1.0
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3.75 to 1.0
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2021
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3.75 to 1.0
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3.75 to 1.0
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3.50 to 1.0
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3.50 to 1.0
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thereafter
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3.50 to 1.0
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3.50 to 1.0
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3.50 to 1.0
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3.50 to 1.0
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The provision of any such additional amounts under the additional term loan facilities or additional revolving credit commitments are subject to certain
additional
conditions and the receipt of certain
additional
commitments by existing or additional lenders. The lenders under the Amended and Restated Agreement are not under any obligation to provide any such additional term loan facilities or revolving credit commitments.
The proceeds of the Revolver, together with proceeds from any additional amounts under the additional term loan facilities or additional revolving credit commitments, may only be used by the Borrower to (i) finance working capital, capital expenditures and other lawful corporate purposes, (ii) finance permitted acquisitions
(as defined in the Amended and Restated Credit Agreement)
and (iii) to refinance certain existing indebtedness.
Borrowings under the Revolver will be made, at the Borrower’s option, at the base rate or the Eurodollar rate, plus, in each case, an applicable margin. The base rate
is
a fluctuating rate of interest per annum equal to the highest of (a) the federal funds rate plus ½ of 1%, (b) the interest announced from time to time by Bank of America as its prime rate and (c) the Eurodollar rate plus 1%. The Eurodollar rate will be the rate of interest per annum equal to LIBOR (based upon an interest period of one, two, three or six months or, under some circumstances, up to twelve months). The applicable margin is based upon the Borrower’s consolidated total leverage ratio
(as defined in the Amended and Restated Credit Agreement)
, as reflected in the schedule below:
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Consolidated Total Leverage Ratio
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Commitment Fee
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Letter of Credit Fee
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Eurodollar Rate Loans
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Base Rate Loans
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> 3.00 to 1.0
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0.30%
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3.25%
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3.25%
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1.25%
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> 2.50 to 1.0 but
<
3
.00
to 1.0
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0.25%
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2.75%
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2.75%
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0.75%
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> 2.00 to 1.0 but
<
2
.50
to 1.0
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0.20%
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2.50%
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2.50%
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0.50%
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<
2.
00 to 1.0
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0.15%
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2.25%
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2.25%
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0.25%
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I
n
addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15% and 0.30% (the applicable percentage depending on the Borrower’s consolidated total leverage ratio as reflected in the schedule above) times the actual daily amount by which $300 million exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit.
The Borrower will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the Amended and Restated Agreement, whether such amounts are issued under the Revolver or under the additional term loan facilities or additional revolving credit facilities, at any time without premium or penalty.
In addition, if the total amount borrowed under the Revolver exceeds $300 million at any time, the Amended and Restated Agreement requires the Borrower to prepay such excess outstanding amounts.
All obligations under the Amended and Restated Agreement are unconditionally guaranteed by i3 Verticals, Inc., a Delaware corporation (the “Company”), and each of the Company’s existing and future direct and indirect material, wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations are secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, the Company and each subsidiary guarantor, in each case whether owned on the date of the initial borrowings or thereafter acquired.
The Amended and Restated Agreement places certain restrictions on the ability of the Borrower, the Company and their restricted subsidiaries to, among other things, incur debt and liens; merge, consolidate or liquidate; dispose of assets; enter into hedging arrangements; make certain restricted payments; undertake transactions with affiliates; enter into sale-leaseback transactions; make certain investments; prepay or modify the terms of certain indebtedness; and modify the terms of certain organizational agreements.
The Amended and Restated Agreement contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain ERISA events, invalidity of loan documents and certain changes in control.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Agreement and to the Security and Pledge Agreement, copies of which are attached to this Current Report on Form 8-K (“Form 8-K”) as
Exhibit 10.1
and
Exhibit 10.2
, respectively and incorporated by reference herein.
Item 2.02.
Results of Operations and Financial Condition.
On
May 13, 2019
,
the
Company
issued a press release announcing the results of its operations for the
three and six months ended March 31, 2019
. A copy of the press release is furnished as Exhibit 99.1 hereto and is hereby incorporated by reference into this Item 2.02.
As provided in G
eneral
I
nstruction
B.2
of Form 8-K, the
information
and exhibits provided pursuant to this Item 2.02 shall not be deemed to b
e “
filed
”
for purposes of S
ection 18 of the Securities
Exchange Act of 1934, as amended (the “
Exchange Act
”
), or otherwise subject to the liability of that section, nor shall they be
deemed to be incorporated by reference in any filing under the Se
curities Act of 1933, as amended (the “
Securities Act
”
), or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
Item 2.0
3
.
Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet
Arrangement
of
a
Regis
trant
.
To the extent applicable, the information included in
I
tem 1.01 is incorporated by ref
erence into this Item 2.03.
Item 7.01.
Regulation FD Disclosure.
The Company has also prepared a supplemental presentation (the “Supplemental Presentation”) containing segment financial performance information for the
three and six months ended March 31, 2019
. A copy of the Supplemental Presentation is furnished as Exhibit 99.2 hereto and is hereby incorporated by reference into this Item 7.01. A copy of the Supplemental Presentation is also available on the Investors section of the Company’s website.
As provided in General I
nstruction
B.2 of Form 8-K, the inf
ormation provide
d pursuant to this Item 7.01 shall not be deemed to
be
“
filed”
fo
r purposes of Section 18 of the Exchange Act
, or otherwise subject to the liability of that
section
,
nor shall i
t be deemed to be incorporate
d by re
ference in any filing under the Securities Act or the Exchange
Act, ex
cept as shall be expressly set forth by s
pecific ref
erence in such a filing.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits.