| Item 1.01 |
Entry into a Material Definitive Agreement.
|
New Secured Revolving Credit
Facility.
On November 18, 2022, Universal Technical Institute, Inc., a
Delaware corporation (the “Company”), as borrower, and
certain of its subsidiaries (collectively with the Company, the
“Loan Parties”), entered into a
Credit Agreement (“Credit Agreement”) with Fifth
Third Bank, a national banking association (the “Lender”). Under the Credit
Agreement, the Company obtained a $100.0 million senior
secured revolving credit facility (the “Facility”) for a term of three
years, unless earlier terminated pursuant to the terms and
conditions set forth in the Credit Agreement. The Facility also
includes a $20.0 million sub facility that is available for
letters of credit.
Interest and
Amortization.
The Credit Agreement provides that the revolver will amortize on an
interest-only basis during its term with principal able to be
borrowed, re-paid and
re-borrowed throughout the
term of the Facility and with the outstanding principal due and
payable at maturity. Advances made under the Facility will bear
interest at a floating rate equal to, at the Company’s option,
either (a) the Base Rate, which is a variable rate equal to
the greater of: (i) 3.5%, or (ii) the rate that the lender
publicly announces, publishes or designates from time to time as
its index rate or prime rate, or any successor rate thereto, in
effect at its principal office, or (b) the Tranche Rate, which
is a variable rate equal to the greater of (i) 0%, or
(ii) Term SOFR relating to quotations for one (1) or
three (3) months, as selected by the Company or as otherwise
set pursuant to the terms of the Credit Agreement, as applicable,
plus, in the case of any Term SOFR loan, an adjustment equal to
0.10% if the interest period is one (1) month and 0.15% if the
interest period is three (3) months. Interest in the case of
Tranche Rate loans will be increased by an applicable margin that
varies from 1.75% up to 2.25% based on the Company’s then-current
total leverage ratio.
Covenants and Other
Matters
The Company is subject to certain customary affirmative and
negative covenants under the Credit Agreement for financing
generally and for the Facility, including financial covenants such
as total leverage ratio, a fixed charge coverage ratio, and a quick
ratio. In addition, the Company is required to maintain a financial
responsibility composite score of at least 1.4 as of the end of the
fiscal year ending September 30, 2023 and of at least 1.5 as
of the end of any fiscal year thereafter. Lastly, the Facility
contains a “clean off” provision, under which the amount
outstanding on the Facility may not exceed $20,000,000 for a single
thirty (30) consecutive day period during the period
commencing on the date of the initial draw under the Facility and
ending on the date which falls twenty (20) months
thereafter.
Guaranty and Security
Agreement.
Concurrent with, and as a condition to, the Facility, the Loan
Parties executed a Guaranty and Security Agreement for the benefit
of the Lender (the “Guaranty and Security
Agreement”), pursuant to which the Loan Parties
(a) guaranteed the payment obligations of the Company under
the Credit Agreement, and (b) secured the payment obligations
of the Company with the assets of the Loan Parties (subject to
certain exceptions).
The foregoing descriptions of the Credit Agreement and the Guaranty
and Security Agreement do not purport to be complete and are
qualified in their entirety by the full text of the Credit
Agreement and the Guaranty and Security Agreement, copies of which
are filed as Exhibit 10.1 and Exhibit 10.2, respectively, hereto
and are incorporated by reference herein.
| Item 2.02 |
Results of Operations and Financial Condition.
|
On November 21, 2022, the Company issued a press release (the
“Press Release”) announcing (a)
select preliminary, unaudited financial information for the year
ended September 30, 2022, (b) its entry into the Credit
Agreement, (c) the date that it anticipates closing its
acquisition of Concorde Career Colleges, Inc., and (d) the date it
plans to release its fiscal 2022 fourth quarter and fiscal year
results. A copy of the Press Release is attached hereto as Exhibit
99.1 and is incorporated by reference herein. The Press Release is
available on the Company’s website.
The information in this Item 2.02, including the information in
Exhibit 99.1 attached hereto pertaining to this Item 2.02, shall
not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as expressly set forth by specific reference
in such a filing.
2