Item 1.01. Entry into a Material Definitive Agreement.
Second Amended and Restated Commitment Letter
As previously announced and discussed further in Item 7.01 of this Form 8-K, in
connection with that certain Share Purchase Agreement, dated as of January 24,
2020 (the "Purchase Agreement"), by and among WEX Inc. (the "Company"), eNett
International (Jersey) Limited, a Jersey limited company ("eNett"), Optal
Limited, a private company limited by shares incorporated in England and Wales
("Optal"), Travelport Limited, a Bermuda exempted company ("Travelport"), Toro
Private Holdings I, Ltd., a private company limited by shares incorporated in
England and Wales ("Toro"), Optal, in its capacity as trustee of the PSP Group
DESOP Discretionary Trust established by way of discretionary trust deed dated
28 October 2008, as amended from time to time, and the other shareholders of
eNett and Optal set forth therein (together with Travelport and Toro, the
"Sellers") under which the Company agreed, subject to the terms and conditions
of the Purchase Agreement, to purchase eNett and Optal from the Sellers (the
"Acquisition"), the Company obtained financing commitments for purposes of
consummating the Acquisition under a commitment letter, dated as of January 24,
2020 (the "Original Commitment Letter"), by and among the Company, Bank of
America, N.A. ("Bank of America") and BofA Securities, Inc. ("BofA Securities"
and, together with Bank of America, the "Original Commitment Parties"), which
the Company amended and restated on February 10, 2020 pursuant to an amended and
restated commitment letter (the "First Amended and Restated Commitment Letter")
with the Original Commitment Parties, Citizens Bank, N.A. ("Citizens"), MUFG
Bank, Ltd. ("MUFG"), SunTrust Robinson Humphrey, Inc. ("STRH"), Truist Bank
("Truist Bank"), Wells Fargo Securities, LLC ("Wells Fargo Securities"), Wells
Fargo Bank, N.A. ("Wells Fargo Bank"), Bank of Montreal ("Bank of Montreal"),
BMO Capital Markets Corp. ("BMO"), Santander Bank, N.A. ("Santander"), KeyBank
National Association ("KeyBank"), KeyBanc Capital Markets Inc. ("KBCM"), Regions
Capital Markets, a division of Regions Bank ("Regions"), Deutsche Bank AG Cayman
Islands Branch ("DBCI"), Deutsche Bank AG New York Branch ("DBNY"), Deutsche
Bank Securities Inc. ("DBSI") and Fifth Third Bank, National Association ("Fifth
Third" and, together with the Original Commitment Parties, Citizens, MUFG, STRH,
Truist Bank, Wells Fargo Securities, Wells Fargo Bank, Bank of Montreal, BMO,
Santander, KeyBank, KBCM, Regions, DBCI, DBNY and DBSI, the "Commitment
Parties").
On June 26, 2020, the Company amended and restated the First Amended and
Restated Commitment Letter pursuant to a second amended and restated commitment
letter (the "Second Amended and Restated Commitment Letter") with the Commitment
Parties. The Second Amended and Restated Commitment Letter, among other things,
reallocates the $1,352,000,000 of aggregate commitments of the Commitment
Parties to fund the Acquisition from (x) a seven-year term loan B facility in
the aggregate amount of $1,052,000,000 and a senior unsecured bridge facility in
the aggregate amount of $300,000,000 to (y) a seven-year term loan B facility in
the aggregate amount of $752,000,000 and a senior secured bridge facility in the
aggregate amount of $600,000,000.
The foregoing description of the Second Amended and Restated Commitment Letter
and the transactions contemplated thereby is not complete and is qualified in
its entirety by reference to the Second Amended and Restated Commitment Letter,
which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Ninth Amendment to Credit Agreement
On June 26, 2020, the Company entered into the Ninth Amendment (the "Ninth
Amendment") to the Credit Agreement, dated as of July 1, 2016, among the
Company, the subsidiaries of the Company identified therein, Bank of America,
N.A., as administrative agent, and the lenders party thereto, as amended by the
First Amendment to Credit Agreement dated July 3, 2017, the Second Amendment to
Credit Agreement dated October 30, 2017, the Third Amendment to Credit Agreement
dated January 17, 2018, the Fourth Amendment to Credit Agreement dated August
24, 2018, the Fifth Amendment to the Credit Agreement dated January 18, 2019,
the Consent and Amendment dated February 27, 2019, the Sixth Amendment to the
Credit Agreement dated May 17, 2019, the Seventh Amendment to the Credit
Agreement dated November 19, 2019 and the Eighth Amendment to the Credit
Agreement dated February 10, 2020 (the "Eighth Amendment") (collectively, the
"Original Credit Agreement"). The
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Ninth Amendment makes certain changes to the Original Credit Agreement,
including, among other things, (i) providing that the effectiveness of the
Eighth Amendment shall not occur and shall be superseded by the Ninth Amendment,
(ii) increasing the Company's capacity to incur additional incremental debt
facilities up to $1,357,000,000 in connection with the Acquisition, (iii)
allowing the Company to reclassify the incurrence of incremental facilities
between the fixed dollar and ratio-based baskets, subject to compliance with a
consolidated secured leverage ratio test, providing potential additional future
incremental debt capacity in the event of future deleveraging, (iv) increasing
cash netting and netting of securitization transactions for the purpose of
calculating leverage ratios (including with respect to financial covenants, but
other than with respect to calculation of the interest rate margins, unless and
until additional tranche A term loan and revolving credit facility lender
consents are obtained for that purpose), (v) requiring the Company to maintain
unrestricted cash and revolver availability of at least $752,000,000 (as may be
reduced pursuant to the terms of the Ninth Amendment) (the "Minimum Availability
Amount"), (vi) in the event the Company's consolidated leverage ratio is equal
to or exceeds 5.50 to 1.00, (a) creating a new top interest rate margin for the
tranche A term loan facility and revolving credit facility of 3.00% with respect
to Eurocurrency Rate Loans, as defined in the Credit Agreement, and 2.00% with
respect to Base Rate Loans, as defined in the Credit Agreement, and (b) if the
Acquisition closes, prohibiting the Company from making certain intercompany
investments and restricted payments, (vii) including a Eurocurrency Rate floor
of 0.75% with respect to the revolving credit facility, (viii) modifying certain
debt, lien and investment baskets to provide additional capacity based on
increases in EBITDA, (ix) reducing the minimum interest coverage ratio
maintenance covenant to 2.75 to 1.00 in certain circumstances, (x) increasing
the maximum consolidated leverage ratio maintenance covenant to 5.50 to 1.00
upon the effectiveness of the Ninth Amendment, with (a) step-downs to 5.00 to
1.00 and 4.50 to 1.00 in future years, and (b) additional increases occurring
upon a consummation of the Acquisition, if it occurs, and (xi) to the extent the
Acquisition is consummated, requiring the Company to submit a borrowing request
to borrow the Minimum Availability Amount, less the amount of any cash used by
the Company for the purpose of consummating the Acquisition.
In connection with the Ninth Amendment, the Company will pay certain customary
lender consent fees upon the effectiveness of the amendments, and reimburse fees
and expenses of Bank of America, N.A. in its capacity as administrative agent.
In addition, while the effectiveness of the Eighth Amendment will not occur as
it has been superseded by the Ninth Amendment, pursuant to the terms of the
Ninth Amendment, the Company will pay customary lender consent fees pursuant to
the Eighth Amendment upon a consummation of the Acquisition, if it occurs.
The foregoing summary of the Ninth Amendment is qualified in its entirety by the
complete text of the Ninth Amendment, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by
reference as if fully set forth herein.
Item 7.01. Regulation FD Disclosure.
On June 29, 2020, the Company announced it has agreed to issue and sell
convertible notes in an aggregate principal amount of $310 million and $90
million in common stock to an affiliate of Warburg Pincus LLC through a private
placement (the "Private Placement"). On June 29, 2020, the Company issued a
press release announcing the Private Placement, the Second Amended and Restated
Commitment Letter and the Ninth Amendment. A copy of that press release is filed
as Exhibit 99.1 hereto and is incorporated herein by reference.
As previously disclosed, (i) the Company has concluded that the SARS-CoV-2
pandemic and conditions arising in connection with it have had, and continue to
have, a material adverse effect on the businesses of eNett and Optal, which is
disproportionate to the effect on others in the relevant industry, (ii) the
Company has advised eNett and Optal that it is not required to close the
Acquisition because of this material adverse effect and (iii) the shareholders
of eNett and the shareholders of Optal each initiated separate legal proceedings
against the Company by filing claims in the High Court of Justice of England and
Wales in the United Kingdom denying that there has been a Material Adverse
Effect (as defined in the Purchase Agreement) and seeking, among other things,
specific performance of the Company's obligations under the Purchase Agreement.
The Company intends to continue to vigorously defend against these claims, and
there has been no change with respect to the Company's position regarding its
obligations under the Purchase Agreement, including its conclusion that a
Material Adverse Effect has
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occurred and that it is not required to close the transaction. However, while
the litigation is pending, WEX remains subject to certain obligations under the
Purchase Agreement, including with respect to financing matters, and the Second
Amended and Restated Commitment Letter and the provisions of the Ninth Amendment
addressing the Acquisition are intended to ensure compliance with these
obligations.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 Second Amended and Restated Commitment Letter, dated as of June
26, 2020, by and among WEX Inc., Bank of America, N.A., BofA
Securities, Inc., Citizens Bank, N.A., MUFG Bank, Ltd., SunTrust
Robinson Humphrey, Inc., Truist Bank, Wells Fargo Securities,
LLC, Wells Fargo Bank, N.A., Bank of Montreal, BMO Capital
Markets Corp., Santander Bank, N.A., KeyBank National
Association, KeyBanc Capital Markets Inc., Regions Capital
Markets, a division of Regions Bank, Deutsche Bank AG Cayman
Islands Branch, Deutsche Bank AG New York Branch, Deutsche Bank
Securities Inc. and Fifth Third Bank, National Association.
10.2 Ninth Amendment to Credit Agreement, dated as of June 26, 2020,
by and among WEX Inc., the subsidiaries of WEX Inc. identified
therein, Bank of America, N.A., as administrative agent, and the
lenders party thereto.
99.1 Press release issued by WEX Inc., dated June 29, 2020
104 Cover Page Interactive Data File (formatted as Inline XBRL with
applicable taxonomy extension information contained in Exhibits
101).
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K contains "forward-looking statements" intended
to qualify for the safe harbors from liability established by the Private
Securities Litigation Reform Act of 1995, including statements regarding: the
proposed Acquisition, future financial and operating results, the receipt of
required consents to increase the cash netting and netting of securitization
transactions for the purpose of calculating the interest rate margins, the
pending litigation with the Sellers with respect to the proposed Acquisition and
any other statements about the Company or eNett or Optal's managements' future
expectations, beliefs, goals, plans or prospects. Any statements that are not
statements of historical facts may be deemed to be forward-looking statements.
When used in this Current Report on Form 8-K, the words "may," "could,"
"anticipate," "plan," "continue," "project," "intend," "estimate," "believe,"
"expect" and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain such words.
These forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results to differ materially, including:
the risk that the Private Placement is delayed or not completed; the outcome of
the pending litigation with the Sellers; whether or not the Company is required
to consummate the proposed Acquisition; the risk that the financing required to
fund the proposed Acquisition is not obtained if required; potential adverse
reactions or changes to business or employee relationships, including those
resulting from the announcement or completion of the proposed Acquisition and
the associated litigation; unexpected costs, charges or expenses resulting from
the proposed Acquisition and associated litigation; as well as other risks and
uncertainties identified in Item 1A of the Company's Annual Report for the year
ended December 31, 2019, filed on Form 10-K with the Securities and Exchange
Commission on February 28, 2020 and Item 1A of our Quarterly Report for the
quarter ended March 31, 2020 filed on Form 10-Q with the Securities and Exchange
Commission on May 11, 2020. The Company's forward-looking statements do not
reflect the potential future impact of any alliance, merger, acquisition,
disposition or stock repurchases, other than the Acquisition. The
forward-looking statements speak only as of the date of this Current Report on
Form 8-K and undue reliance should not be placed on these statements. The
Company disclaims any obligation to update any forward-looking statements as a
result of new information, future events or otherwise.
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