Item 1.01. Entry into a Material Definitive Agreement.
On December 3, 2021, Under Armour, Inc. (the “Company”)
entered into Amendment No. 3 (the “Third Amendment”) to the
Amended and Restated Credit Agreement, dated as of March 8,
2019, by and among the Company, as borrower, JPMorgan Chase Bank,
N.A., as administrative agent, and the other lenders and arrangers
party thereto (the “Initial Credit Agreement”), as amended by
Amendment No. 1, dated as of May 12, 2020 (the “First
Amendment”) and Amendment No. 2, dated as of May 17, 2021
(the “Second Amendment”). The Initial Credit Agreement as amended
by the First Amendment and the Second Amendment is referred to
herein as the “Existing Credit Agreement,” and the Existing Credit
Agreement as amended by the Third Amendment is referred to herein
as the “Amended Credit Agreement.”
The Amended Credit Agreement provides for a revolving credit
facility commitment of $1,100.0 million, consistent with the
Existing Credit Agreement. The material changes effected to the
terms of the Existing Credit Agreement by the Third Amendment
include the following: (i) the extension of the maturity date
from March 8, 2024, to December 3, 2026; (ii) an updated
pricing grid generally decreasing the applicable margins for
borrowings and undrawn commitment fees; (iii) fall away of
collateral and guarantee requirements following an investment-grade
rating from two rating agencies; (iv) implementation of SOFR
as the replacement of LIBOR as a benchmark interest rate for U.S.
dollar borrowings (and analogous benchmark rate replacements for
borrowings in Yen, Canadian Dollars, Pound Sterling and Euro);
and (v) amending certain affirmative and negative covenants
and related definitions.
The Third Amendment decreases the interest rate margins provided
for in the Existing Credit Agreement and provides that borrowings
under the Amended Credit Agreement will bear interest at a rate per
annum equal to, at the Company’s option, either: (a) an
alternate base rate (for borrowings in U.S. dollars), (b) a term
rate (for borrowings in U.S. dollars, Euros, Japanese Yen or
Canadian Dollars) or (c) a “risk free” rate (for borrowings in
U.S. dollars or Pounds Sterling), plus in each case an applicable
margin. The applicable margin for loans will be adjusted by
reference to a pricing grid based on a leverage ratio of
consolidated total indebtedness to consolidated EBITDA and ranges
between 1.00 - 1.75% (or, in the case of alternate base rate loans,
0.00% - 0.75%). The Third Amendment also decreases the commitment
fees payable by the Company on the average daily unused amount of
the revolving credit facility to between 0.15% and 0.25%.
The Amended Credit Agreement continues to be primarily secured by a
first-priority security interest in substantially all of the assets
of the Company and its subsidiary guarantors (excluding real
property, capital stock in and debt of subsidiaries of the Company
holding certain real property and other customary exceptions);
however, the Amended Credit Agreement provides for the permanent
fall away of guarantees and collateral upon the Company’s
achievement of investment grade rating from two rating
agencies.
Consistent with the Existing Credit Agreement, the Amended Credit
Agreement:
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contains negative covenants that, subject to significant
exceptions, limit the ability of the Company and its subsidiaries
to, among other things, incur additional indebtedness, make
restricted payments, sell assets, pledge their assets as security,
make investments, loans, advances, guarantees and acquisitions,
undergo fundamental changes and enter into transactions with
affiliates;
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requires the Company to maintain a ratio of (i) consolidated
EBITDA to consolidated interest expense of not less than 3.50 to
1.0 and (ii) consolidated total indebtedness to consolidated
EBITDA of not greater than 3.25 to 1.0, as described in more detail
in the Amended Credit Agreement; and
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includes events of default that are customary for a facility of
this nature, including (subject in certain cases to grace periods
and thresholds) nonpayment of principal, nonpayment of interest,
fees or other amounts, material inaccuracy of representations and
warranties, violation of covenants, cross-default to other material
indebtedness, bankruptcy or insolvency events, material judgment
defaults and a change of control as specified in the Credit
Agreement. If an event of default occurs, the commitments of the
lenders to lend under the Credit Agreement may be terminated and
the maturity of the amounts owed may be accelerated.
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