Item 1.01. Entry into a Material Definitive Agreement.
On October 26, 2020, Morningstar, Inc. ("Morningstar" or the "Company")
completed the issuance and sale of $350.0 million aggregate principal amount of
2.32% senior notes due October 26, 2030 (the "Notes"), in an offering exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Note Purchase Agreement entered into on
the same date ("Note Purchase Agreement"). Interest on the Notes will be paid
semi-annually on each October 30 and April 30 during the term of the Notes and
at maturity, with the first interest payment date occurring on April 30, 2021.
The Company expects to use the net proceeds from the offering to reduce
outstanding indebtedness under the Company's credit agreement and for general
The Notes were offered and sold to institutional accredited investors in a
private placement. The Company does not intend to register the Notes for resale
under the Securities Act and the Notes may not be offered or sold absent such
registration or an applicable exemption from the registration requirements of
the Securities Act and applicable state securities laws.
The Note Purchase Agreement provides that the Company shall have a Consolidated
Leverage Ratio as of the end of any fiscal quarter of not greater than 3.50 to
1.00; provided that, solely with respect to the four fiscal quarters following
any Qualified Acquisition (as defined in the Note Purchase Agreement), the
Consolidated Leverage Ratio determined as of the end of such four fiscal
quarters shall not be greater than 4.00 to 1.00. If following a Qualified
Acquisition the Consolidated Leverage Ratio exceeds 3.50 to 1.00, an incremental
leverage fee of 0.75% of the aggregate outstanding principal amount of the Notes
will be due with respect to each fiscal quarter beginning thereafter during
which the Consolidated Leverage Ratio exceeds 3.50 to 1.00 The Note Purchase
Agreement provides that the Company shall have a Consolidated Interest Coverage
Ratio as of the end of any fiscal quarter of not less than 2.50 to 1.00. The
Company will not at any time permit Priority Debt to exceed 15% of Consolidated
Total Assets (determined as of the last day of the most recently ended fiscal
quarter of the Company).
The Company may, at its option, prepay at any time all, or from time to time any
part of, the Notes, in an amount not less than 5% of the aggregate principal
amount of the Notes then outstanding in the case of a partial prepayment, at
100% of the principal amount so prepaid, and a make-whole amount determined as
provided in the Note Purchase Agreement for the prepayment date with respect to
such principal amount.
The Note Purchase Agreement contains restrictive covenants customary for such
financings, including, among other things, covenants that place limits on the
Company's ability to incur liens on assets, transfer or sell the Company's
assets, merge or consolidate with other persons, or enter into material
transactions with affiliates. The Note Purchase Agreement also contains events
of default customary for such financings, the occurrence of which will permit
the purchasers of the Notes to accelerate the amounts due thereunder. The Notes
rank pari passu in right of repayment with the Company's other senior unsecured
Morningstar's obligations under the Note Purchase Agreement are unconditionally
guaranteed by Morningstar's subsidiaries, Morningstar Investment Management LLC,
Morningstar Research Services LLC and Morningstar Ratings Holding Corp., and
will in the future be guaranteed by any other domestic subsidiary of Morningstar
(with certain exceptions) that contributes 10% or more of the consolidated
revenue of Morningstar in any fiscal year.
This summary of the Note Purchase Agreement does not purport to be complete and
is subject to, and qualified in its entirety by, reference to the Note Purchase
Agreement that is filed as Exhibit 10.1 to this Current Report on Form 8-K and
incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Include the following information:
Exhibit No. Description
10.1 Note Purchase Agreement dated of as October 26, 2020 by and among
Morningstar, Inc. and each of the Purchasers signatory thereto.
104 The Cover page from this Current Report on Form 8-K formatted in
Inline XBRL (included as Exhibit 101).
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