Item 1.01. Entry into a Material Definitive Agreement.
On January 9, 2020, The Marcus Corporation (the "Company") entered into a Credit
Agreement among the Company and several banks, including JPMorgan Chase Bank,
N.A., as Administrative Agent, and U.S. Bank National Association, as
Syndication Agent (the "Credit Agreement"). The Credit Agreement replaces the
Company's existing $225 million revolving credit facility. The Company intends
to use borrowings under the Credit Agreement for general corporate purposes.
The Credit Agreement provides for a revolving credit facility that matures on
January 9, 2025 with an initial maximum aggregate amount of availability of $225
million. The Company may increase the aggregate amount of availability under the
Credit Agreement by an aggregate amount of up to $125 million by increasing the
revolving credit facility or adding one or more tranches of term loans. The
Company's ability to increase availability under the Credit Agreement is subject
to certain conditions, including, among other things, the absence of any default
or event of default or material adverse effect under the Credit Agreement. All
borrowings under the Credit Agreement are unsecured. On January 9, 2020, the
Company borrowed $68 million under the revolving credit facility to refinance
the outstanding balance under the Company's existing credit facility and to pay
certain fees and expenses incurred in connection with the closing of the Credit
Under the Credit Agreement, the Company has agreed to pay a facility fee,
payable quarterly, equal to 0.125% to 0.25% of the total commitment, depending
on the Company's consolidated debt to capitalization ratio, as defined in the
Credit Agreement. Certain borrowings, such as ABR borrowings, under the
revolving credit facility bear interest, payable no less frequently than
quarterly, at a rate equal to the alternate base rate (as defined in the Credit
Agreement) plus the applicable rate (as defined in the Credit Agreement). Other
borrowings, such as Eurodollar borrowings, under the revolving credit facility
bear interest at a rate equal to the adjusted LIBO rate for the interest period
(as defined in the Credit Agreement) plus the applicable rate.
The Credit Agreement contains various restrictions and covenants applicable to
the Company and certain of its subsidiaries. Among other requirements, the
Credit Agreement (a) limits the amount of priority debt (as defined in the
Credit Agreement) held by restricted subsidiaries of the Company to no more than
20% of the Company's consolidated total capitalization (as defined in the Credit
Agreement), (b) limits the Company's permissible consolidated debt to
capitalization ratio to a maximum of 0.55 to 1.0 and (c) requires the Company to
maintain a minimum fixed charge coverage ratio (consolidated adjusted cash flow
to consolidated interest and rental expense) of 3.0 to 1.0, as defined in the
The Credit Agreement also contains customary events of default. If an event of
default under the Credit Agreement occurs and is continuing, then, among other
things, the lenders may declare any outstanding obligations under the Credit
Agreement to be immediately due and payable.
The foregoing description of the Credit Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Credit Agreement filed herewith as Exhibit 4.1 and incorporated herein by
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-K is
hereby incorporated by reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits. The following exhibit is being filed herewith:
4.1 Credit Agreement, dated as of January 9, 2020, among the Company, the
financial institutions party thereto and JPMorgan Chase Bank, N.A., as
1 The schedules and exhibits to this document have not been filed with the
Securities and Exchange Commission because they do not contain information that
is material to an investment decision. The Company agrees to furnish
supplementally a copy of any such schedule or exhibit to the Securities and
Exchange Commission upon request.
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