Item 1.01. Entry into a Material Definitive Agreement.
On July 19, 2022, Visteon Corporation (the “Company”) entered into Amendment No. 6 (the “Amendment”) to its credit agreement, dated as of April 9, 2014 (as amended by that certain Waiver and Amendment No. 1 to Credit Agreement, dated as of March 25, 2015, Amendment No. 2 to Credit Agreement, dated as of March 24, 2017, Amendment No. 3 to Credit Agreement, dated as of November 14, 2017, Amendment No. 4 to Credit Agreement, dated as of May 30, 2018, and Amendment No. 5, dated as of December 19, 2019, the “Existing Credit Agreement”; and the Existing Credit Agreement, as amended by the Amendment, the “Credit Agreement”) with Citibank, N.A., as administrative agent, the guarantors party thereto and certain lenders party thereto. The Amendment provides for (i) the replacement and extension of the existing revolving credit facility with a new revolving credit facility (the “Refinancing Revolving Facility” and any loans made pursuant thereto, “New Revolving Credit Loans”) in an aggregate principal amount of $400,000,000, (ii) the refinancing of the Term Loans (as defined in the Existing Credit Agreement) with a new term loan “A” facility (the “Refinancing Term Facility” and, together with the Refinancing Revolving Facility, the “Refinancing Facilities”; the loans made pursuant to the Refinancing Term Facility, the “New Term Loans” and together with the New Revolving Credit Loans, the “New Loans”) and (iii) certain other modifications to the Existing Credit Agreement as described below and therein.
At the Company’s option, New Loans may be maintained from time to time at an interest rate equal to the applicable domestic rate (“Base Rate”) plus an applicable margin or the SOFR-based rate (“SOFR Rate”) plus an applicable margin. The applicable margin will range from 1.00% to 1.75% on SOFR Rate loans and from 0.00% to 0.75% on Base Rate loans, based on the Company’s Total Gross Leverage Ratio (as defined in the Credit Agreement) from time to time. The Company will also pay a commitment fee between 0.15% and 0.25%, payable quarterly, on the average daily unused amount of the Refinancing Revolving Facility based on the Company’s Total Gross Leverage Ratio from time to time. New Revolving Credit Loans, at the Company’s option, may also be denominated in Euro or Pounds Sterling, and such loans will be maintained at an interest rate equal to the applicable benchmark rate as described in the Credit Agreement plus an applicable margin ranging from 1.00% to 1.75% based on the Company’s Total Gross Leverage Ratio from time to time.
Additionally, the Company can receive an interest rate adjustment of up to 0.05% under the Credit Agreement based on its fiscal year performance with respect to a ratio of (a) the total carbon emissions (measured in metric tons CO2e per ton of production) of certain major manufacturing sites, warehouses and major technical centers of the Company and its subsidiaries, to (b) the consolidated revenue of the Company and its subsidiaries.
Up to $75,000,000 of the Refinancing Revolving Facility is available for the issuance of letters of credit, denominated in Dollars, Euro or Pounds Sterling, and any such issuance of letters of credit will reduce the amount available for New Revolving Credit Loans. Up to $20,000,000 of the Refinancing Revolving Facility is available for swing line advances, and any such swing line advances will reduce the amount available for New Revolving Credit Loans. The Company may request an increase in the limit under the Refinancing Revolving Facility and/or the Refinancing Term Facility.
Subject to certain exceptions, the Refinancing Facilities shall mature on July 19, 2027 (the “Maturity Date”). Prior to the Maturity Date, the Refinancing Term Facility will amortize in equal quarterly installments (commencing on June 30, 2023) in an aggregate annual amount equal to 5.00% of the original principal amount of the Refinancing Term Facility. New Revolving Credit Loans and the outstanding balance of the New Term Loans are due and payable in full on the Maturity Date. Outstanding borrowings under the Refinancing Facilities are prepayable without penalty at any time.
The Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative and negative covenants, including a financial covenant for the benefit of the lenders under the Refinancing Revolving Facility, and contains customary events of default. Pursuant to such financial
covenant, the Company is not to permit the total net leverage ratio as of the last day of a test period to exceed 3:50:1:00, subject to an increase to 4.00:1.00 following a material acquisition.
All obligations under the Credit Agreement and obligations in respect of certain cash management services and swap agreements with the lenders and their affiliates are (i) unconditionally guaranteed by certain of the Company’s subsidiaries and (ii) secured by a first-priority perfected lien (subject to certain exceptions) in substantially all of the property of the Company and the subsidiaries party to the security documents, subject to certain limitations.
The foregoing summary of the Amendment is not complete and is qualified in its entirety by reference to the full and complete Amendment, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.