Item 1.01 Entry into a Material Definitive Agreement.
On March 25, 2020, Kennedy-Wilson, Inc. (the “Borrower”), a wholly-owned subsidiary of Kennedy-Wilson Holdings, Inc. (“KWH”), KWH and certain subsidiaries of KWH (the “Subsidiary Guarantors”) entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with a syndicate of lenders, Bank of America, N.A., as administrative agent, BofA Securities, Inc. as joint lead arranger and joint bookrunner, JPMorgan Chase Bank, N.A., as joint lead arranger and joint bookrunner, and U.S. Bank National Association as joint lead arranger, pursuant to which the Borrower’s existing unsecured credit facility was amended and restated to provide for, among other things, a $500 million unsecured revolving credit facility (the “Second A&R Facility”). As of March 25, 2020, there are no borrowings outstanding under the Second A&R Credit Agreement.
Loans under the Second A&R Facility bear interest at a rate equal to LIBOR plus between 1.75% and 2.50%, depending on the consolidated leverage ratio as of the applicable measurement date. The Second A&R Facility has a maturity date of March 25, 2024. Subject to certain conditions precedent and at the Borrower’s option, (i) the maturity date of the Second A&R Facility may be extended up to two times, in six-month increments, and (ii) the aggregate amount of the Second A&R Facility may be increased to an amount not exceeding $1 billion.
The Second A&R Facility contains certain covenants that, among other things, limit KWH and certain of its subsidiaries’ ability to incur additional indebtedness, repurchase capital stock or debt, sell assets or subsidiary stock, create or permit liens on assets, engage in transactions with affiliates, enter into sale/leaseback transactions, issue subsidiary equity and enter into consolidations or mergers.
The Second A&R Credit Agreement requires KWH to maintain (i) a maximum consolidated leverage ratio (as defined in the Second A&R Credit Agreement) of not greater than 65%, measured as of the last day of each fiscal quarter, (ii) a minimum fixed charge coverage ratio (as defined in the Second A&R Credit Agreement) of not less than 1.70 to 1.00, measured as of the last day of each fiscal quarter for the period of four full fiscal quarters then ended, (iii) a minimum consolidated tangible net worth equal to or greater than the sum of 70% of consolidated tangible net worth as of the date of the most recent financial statements available as of the effective date of the Second A&R Facility plus an amount equal to fifty percent (50%) of net equity proceeds received by KWH after the date of the most recent financial statements that are available as of the effective date of the Second A&R Facility, measured as of the last day of each fiscal quarter, (iv) a maximum recourse leverage ratio (as defined in the Second A&R Credit Agreement) of not greater than an amount equal to consolidated tangible net worth as of the measurement date multiplied by 1.5, measured as of the last day of each fiscal quarter, (v) a maximum secured recourse leverage ratio (as defined in the Second A&R Credit Agreement) of not greater than 3.5% of consolidated total asset value and 3.5% of consolidated total asset value as of the effective date of the Second A&R Facility, measured as of the last day of each fiscal quarter, (vi) a maximum adjusted secured leverage ratio (as defined in the Second A&R Credit Agreement) of not greater than 55%, measured as of the last day of each fiscal quarter, and (vii) liquidity (as defined in the Second A&R Credit Agreement) of at least $75 million. The Second A&R Facility has customary events of default, the occurrence of which may accelerate the outstanding balance under the Second A&R Facility.
The obligations of the Borrower pursuant to the Second A&R Facility are guaranteed by KWH and the Subsidiary Guarantors.
The above description of the Second A&R Facility is a summary. Please refer to the terms of the Second A&R Credit Agreement, which is filed as Exhibit 10.1 to this Current Report.
Item 2.03 Creation of a Direct Financial Obligation or an Off-Balance Sheet Arrangement.
The information set forth in Item 1.01 above is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
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Exhibit No.
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Description
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10.1
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Second Amended and Restated Credit Agreement, dated March 25, 2020, among Kennedy-Wilson, Inc., as borrower, Kennedy-Wilson Holdings, Inc. and certain subsidiaries of Kennedy-Wilson Holdings, Inc. from time to time party thereto as guarantors, the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and Bank of America, N.A. and JPMorgan Chase Bank, N.A., as letter of credit issuers.
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