Amortization and Prepayments
The First Lien Senior Facilities require scheduled quarterly amortization payments on the term loan in an annual amount equal to 1.0% of the
original principal amount of the term loan, with the balance to be paid at maturity.
In addition, the First Lien Senior Facilities
require the Borrower to prepay outstanding term loan borrowings, subject to certain exceptions, with annual excess cash flow, the net cash proceeds of
non-ordinary
course asset sales and the net cash proceeds
of any issuance or incurrence of debt.
The Borrower may voluntarily repay outstanding loans under the First Lien Senior Facilities at any
time, without prepayment premium or penalty, except in connection with a repricing event in respect of the term loans as described in the First Lien Credit Agreement, subject to customary “breakage” costs with respect to LIBOR loans.
Collateral and Guarantors
All
obligations under the First Lien Senior Facilities are unconditionally guaranteed by Holdings, Intermediate Holdings and U.S. Holdings on a limited-recourse basis and each existing and future direct and indirect wholly owned domestic subsidiary of
the Borrower and Canadian subsidiary of Intermediate Holdings, subject to certain exceptions.
The obligations are secured by a pledge of
(1) the Borrower’s capital stock directly held by U.S. Holdings, (2) the capital stock of U.S. Holdings and of any Canadian subsidiary directly held by Intermediate Holdings, (3) Intermediate Holdings’ capital stock directly
held by Holdings and (4) substantially all of the assets of the Borrower and each domestic and Canadian subsidiary guarantor, in each case subject to certain exceptions.
Restrictive Covenants and Other Matters
The Revolving Credit Facility requires that Intermediate Holdings, commencing as of the last day of the first full fiscal quarter after the
Closing Date and subject to a testing threshold, comply on a quarterly basis with a maximum net first lien leverage ratio.
The First Lien
Senior Facilities contain certain customary affirmative and negative covenants.
The First Lien Senior Facilities contain certain
customary events of default, including relating to a change of control. If an event of default occurs, the lenders under the First Lien Senior Facilities will be entitled to take various actions, including the acceleration of amounts due under the
First Lien Senior Facilities and all actions permitted to be taken by a secured creditor in respect of the collateral securing the First Lien Senior Facilities.
Second Lien Term Facility
General
On the Closing Date, in connection with the Acquisition, the Borrower entered into a Second Lien Credit Agreement (the “
Second Lien
Credit Agreement
”), dated as of the Closing Date, by and among Holdings, Intermediate Holdings, U.S. Holdings, the Borrower, the lenders and Credit Suisse, as administrative agent, which provides for senior secured financing consisting of a
second lien term loan facility (the “
Second Lien Term Facility
”), in an aggregate principal amount of $260.0 million with a maturity of seven years.
Proceeds of the Second Lien Term Loan Facility were used to fund the transactions contemplated by the Arrangement Agreement, including the
consummation of the Acquisition and the repayment in full of the Existing Credit Facility (as defined below), and to pay related fees and expenses.
Interest Rates and Fees
Borrowings under
the Second Lien Term Facility will bear interest at a rate equal to, at the option of Holdings, either (a) an adjusted LIBO rate determined by reference to the costs of funds for Eurodollar or Canadian deposits for the interest period relevant
to such borrowing, adjusted for certain additional costs, subject to a 0.00% floor, or (b) a base rate, in each case plus an applicable margin.
