Item 1.01 Entry into a Material Definitive Agreement
On April 17, 2020, StarTek, Inc. (the "Company") entered into a Receivables Sale
and Contribution Agreement with StarTek USA, Inc., a wholly-owned subsidiary of
the Company, and StarTek Receivables Funding, LLC (the "SPE"), a newly-formed
special purpose entity that is a wholly-owned subsidiary of StarTek USA, Inc.,
pursuant to which the Company and StarTek USA, Inc. will sell or contribute to
the SPE trade receivables originated by the Company and StarTek USA, Inc. On
April 17, 2020, the Company also entered into a Receivables Purchase Agreement
with the SPE and Regions Bank ("Purchaser"), pursuant to which the SPE will sell
trade receivables received from StarTek, Inc. and StarTek USA, Inc. to
Purchaser, and the Company will service receivables on behalf of the SPE and
Purchaser.
Under the securitization transaction described above, the SPE will be paid a
discounted purchase price for each receivable sold. The discount rate used to
determine the purchase price for the receivables is based upon LIBOR plus a
margin of 1.60% per annum. The Purchaser's investment in receivables can be up
to $35 million. The securitization provides for a non-usage fee of 0.40% per
annum. The securitization transaction described above is non-recourse to the
Company and StarTek USA, Inc. Under the terms of the agreements governing such
securitization transaction, as long as the receivables are qualifying
receivables and there are no breaches of any representations and warranties
relating to such receivables, then the Company and StarTek USA, Inc. do not
retain any rights and have no obligations with respect to the sold receivables.
The scheduled termination date for the securitization is April 17, 2023. The SPE
may terminate the securitization early upon five business days' notice. The
terms of the securitization include customary representations and warranties,
customary affirmative and negative covenants, and customary events of
termination events. Upon the occurrence of an event of termination, Purchaser,
among other remedies, may terminate the securitization.
Item 1.02 Termination of a Material Definitive Agreement
On April 17, 2020, the Company used proceeds from the securitization to prepay
and terminate the credit facility made available to it under the Credit
Agreement dated as of April 29, 2015 among the Company, StarTek Health Services,
Inc., StarTek USA, Inc., Collection Center, Inc. and BMO Harris Bank, N.A., as
administrative agent and lender, as previously amended.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information under Item 1.01 is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
Exhibit Number Description
10.1 Receivables Sale and Contribution Agreement dated as of April
17, 2020 among StarTek, Inc. and StarTek USA, Inc., as
Originators, StarTek, Inc., as Master Servicer and StarTek
Receivables Funding, LLC, as Buyer
10.2 Receivables Purchase Agreement dated as of April 17, 2020 among
StarTek Receivables Funding, LLC, as Seller, Regions Bank, as
Purchaser and StarTek, Inc., as Initial Master Servicer
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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