OPENLANE, INC. Item 1.01 Entry Into a Material Definitive Agreement.
On
On
The respective finance receivables sold and a cash reserve serve as security for the obligations to the Purchasers under the Receivables Purchase Agreement and for the obligations to the Trust under the Canadian Receivables Purchase Agreement. In each case, the amount of the cash reserve depends on circumstances which are set forth in the respective agreements. After the occurrence of a termination event, as defined in the Receivables Purchase Agreement, the Purchasers may, and could, cause the stock of AFC Funding to be transferred to the agent under the Receivables Purchase Agreement for the benefit of the Purchasers, though as a practical matter the Purchasers would look to the liquidation of the receivables under the transaction documents as their primary remedy. Upon the occurrence of a termination event under the Canadian Receivables Purchase Agreement, the Trust has discretion to liquidate the receivables under the applicable transaction documents as its primary remedy. Termination events, as defined in the Receivables Purchase Agreement, include, among other things, breaches of representations and warranties; failures to perform covenants and other obligations as seller or servicer; violations of financial covenants related to AFC, AFC Funding or the Company (including, among others, limits on the amount of debt AFC can incur, minimum levels of tangible net worth of AFC and AFC Funding, and certain financial covenants contained in the Company's senior secured credit agreement); defaults in payment of other indebtedness of the Company, AFC or AFC Funding; violation of certain covenants related to the performance of the receivables portfolio; the occurrence of a material adverse change in the collectability of the receivables owned by AFC Funding or the business, operations, property or financial condition of AFC or AFC Funding; certain changes in control of AFC or AFC Funding; and certain bankruptcy events with respect to AFC, AFC Funding or the Company. The Canadian Receivables Purchase Agreement includes substantially similar termination events pertaining to AFCI, AFC and the Company, as applicable.
The following provides a brief description of the amendments effected by the
Receivables Purchase Agreement and the Canadian Receivables Purchase Agreement
that are material to the Company. The program limit under the Canadian
Receivables Purchase Agreement remains at
Receivables Purchase Agreement •The aggregate maximum commitment of the Purchasers was increased from$1.70 billion to$2.00 billion ; •The Termination Date was extended fromJanuary 31, 2024 toJanuary 31, 2026 ; •The discount is now based on SOFR reference rate for a one-month tenor plus a spread; •The required enhancement percentage was reduced and may be further reduced by consent of all Purchasers; •The net spread trigger for the level one trigger has been favorably modified; •Provisions designed to provide additional lending and operational flexibility were favorably modified or added; and •Provisions providing for a mechanism for determining an alternative rate of interest were modified. Canadian Receivables Purchase Agreement •The Termination Date was extended fromJanuary 31, 2024 toJanuary 31, 2026 ; •The required enhancement percentage was reduced and may be further reduced by consent of all Purchasers; •The net spread trigger for the cash reserve event has been favorably modified; and •Provisions designed to provide additional lending and operational flexibility were favorably modified or added.
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Certain of the Purchasers and agents and their respective affiliates have, from
time to time, performed, and may in the future perform, various financial
advisory and investment banking, commercial banking and other services for the
Company and its affiliates, for which they received or will receive customary
fees and expenses.
In addition,
The above description of the amendments effected by the Receivables Purchase
Agreement and the Canadian Receivables Purchase Agreement is not complete and is
qualified in its entirety by reference to the full text of the Receivables
Purchase Agreement and the Canadian Receivables Purchase Agreement, copies of
which will be filed as exhibits to the Company's Quarterly Report on Form 10-Q
for the quarter ended
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Forward-Looking Statements
Certain statements contained in this report include "forward-looking statements"
as that term is defined in the Private Securities Litigation Reform Act of 1995.
In particular, statements made in this report that are not historical facts may
be forward-looking statements. Words such as "should," "may," "will,"
"anticipate," "expect," "project," "target," "intend," "plan," "believe,"
"seek," "estimate," "assume," "could," "continue" and similar expressions
identify forward-looking statements. The forward-looking statements contained in
this presentation are based on management's current assumptions, expectations
and/or beliefs, are not guarantees of future performance and are subject to
substantial risks, uncertainties and changes that could cause actual results to
differ materially from the results projected, expressed or implied by these
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in the section
entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended
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