Item 1.01
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Entry Into a Material Definitive Agreement Credit Agreement
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Credit Agreement
On February 13, 2020, Owens & Minor, Inc. (the “Company”) entered into a Fifth Amendment to Credit Agreement (the “Fifth Amendment”), by and among O&M Halyard, Inc., Owens & Minor Distribution, Inc., Owens & Minor Medical, Inc., Barista Acquisition I, LLC and Barista Acquisition II, LLC (the “Borrowers”), the Company and each other domestic subsidiary of the Company party thereto from time to time as guarantors (collectively, the “Guarantors” and, together with the Borrowers, the “Credit Parties”), Bank of America, N.A., as successor administrative agent (the “Administrative Agent”), as administrative agent for the term B facility, and as collateral agent for the Secured Parties (the “Collateral Agent”), the other agents party thereto and a syndicate of financial institutions specified therein.
The Fifth Amendment will amend the Credit Agreement, dated as of July 27, 2017 (as previously amended, the “Credit Agreement”), by and among the Borrowers, the Company, the other Guarantors, the Administrative Agent and the other agents party thereto and the syndicate of financial institutions specified therein.
The amendments to the Credit Agreement pursuant to the Fifth Amendment include:
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amendments to the leverage and interest coverage financial covenants;
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amendments to certain negative covenants, including to increase the limit on accounts receivable securitization obligations to $350 million and to permit the use of asset sale proceeds from the previously announced intention to sell the Company’s Movianto business to repay the Company’s 3.875% Senior Notes due 2021;
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amendments to certain other affirmative and negative covenants in connection with the proposed transactions;
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payment to the Administrative Agent, for the benefit of each bank executing the Fifth Amendment, an amendment fee equal to the sum of (i) 0.25% of the outstanding Term A Loans (as defined in the Credit Agreement) held by such bank on the effective date of the Fifth Amendment plus (ii) 1.00% of the Revolving Committed Amount (as defined in the Credit Agreement) of such bank on the effective date of the Fifth Amendment plus (iii) 0.15% of the outstanding Term B Loans (as defined in the Credit Agreement) held by such bank on the effective date of the Fifth Amendment;
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amendments to increase the applicable margin on Revolving Loans, Swingline Loans, Term A-1 Loans, Term A-2 Loans and the Standby Letter of Credit Fee from L+3.50% to L+4.25% with one stepdown based on a leverage calculation; and
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amendments that limit our ability to borrow $60 million of the Revolving Committed Amount without the consent of all Revolving Lenders (as defined in the Credit Agreement).
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The effectiveness of the Fifth Amendment is subject to the prepayment of the Term A Loans in an amount of $150 million from the proceeds of an anticipated securitization transaction and other customary conditions precedent.
The foregoing description of the Fifth Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Fifth Amendment attached hereto as Exhibit 10.1, which is incorporated herein by reference.