Item 1.01. Entry into a Material Definitive Agreement
On July 25, 2016, CSC Australia PTY. Limited and UXC Limited (collectively, the “Borrowers”), the Company, as guarantor, the lenders from time to time party thereto (the “AUD Lenders”) and Commonwealth Bank of Australia, as agent (in such capacity, the “Agent”) entered into a Syndicated Facility Agreement (the “AUD Term Loan Agreement”). The AUD Term Loan Agreement is comprised of: (i) an A$100.0 million delayed-draw unsecured term loan (the “Initial Term Facility”) and (ii) an A$5.0 million line of credit for the issuance of bank guarantees (the “W/C Facility”). The AUD Term Loan Agreement permits the Company to request incremental term loans of up to A$175.0 million (the “Incremental Facilities” and, together with the Initial Term Facility, the “Term Facilities”), which, if requested by the Company and agreed to by the lenders providing such Incremental Facilities, would result in a maximum of A$275 million in total Term Facilities. The intended use of proceeds from the Term Facilities is to partially repay amounts drawn under the Company’s existing revolving credit facility and for working capital and other general corporate purposes. The intended use of proceeds from the W/C Facility is for working capital and other general corporate purposes.
The Initial Term Facility and any Incremental Facility are scheduled to mature on July 25, 2021. The W/C Facility is scheduled to mature on July 25, 2017, subject to extension pursuant to the terms of the AUD
Term Loan Agreement. Amortization of the Initial Term Facility is paid annually at the rate of 5.0% of original principal amount per annum. Any prepayment or scheduled loan amortization under any Term Facility cannot be redrawn.
The Borrowers may request advances (i) in respect of the Initial Term Facility, until the date that is three months after the signing of the AUD Term Loan Agreement and (ii) in respect of any Incremental Facility, during the period commencing on the date that the incremental commitments are incurred through the date that is one month after the date the incremental commitments are incurred. Borrowings under the Initial Term Facility bear interest at a variable rate equal to the BBSY Bid (as defined in the AUD Term Loan Agreement) for a one, two, three or six-month interest period (or any other period agreed between the Company and the Agent), plus a margin between 0.95% and 1.45%, based on the published credit ratings of the Company. Borrowings under any Incremental Facility will bear interest at a rate agreed by the lenders under the applicable Incremental Facility, CSC Australia PTY. Limited and the Company.
The AUD Term Loan Agreement contains representations, warranties, and covenants customary for facilities of this type, as well as customary events of default, consistent with the Company’s existing credit facilities and other term loan facilities, including (i) cross payment event of default with respect to indebtedness of at least US$250.0 million or other events if the effect is to accelerate or permit acceleration of such indebtedness and (ii) the occurrence of a change of control. In addition, under the AUD Term Loan Agreement, the Company is required to maintain an interest coverage ratio of EBITDA to interest expense of no less than 3.00 to 1.00 for any four quarter period ending at the end of a fiscal quarter and a leverage ratio of total debt to EBITDA of no more than 3.00 to 1.00 as of the end of each fiscal quarter, giving pro forma effect to the financial impact of acquisitions or dispositions during the latest twelve month fiscal period, and including the effect of expected near-term (realizable within 12 months) operational and cost synergies resulting from acquisitions or restructuring actions.
The AUD Term Loan Agreement includes various customary remedies for the AUD Lenders following an event of default, including the acceleration of repayment of outstanding amounts under the AUD Term Loan Agreement.
The foregoing description of the AUD Term Loan Agreement is only a summary and is qualified in its entirety by reference to the full text of the AUD Term Loan Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.