PPD, INC. Item 1.01 Entry into a Material Definitive Agreement.
Overview
On
The proceeds from borrowings under the Term Facility, together with cash on
hand, were used to (i) refinance in full the principal amount outstanding and
accrued and unpaid interest, fees and other amounts then due and owing under,
the Credit Agreement dated as of
Interest Rate
Borrowings under the Term Facility bear interest, initially, at a rate equal to, at the option of the Company, either (a) Adjusted LIBOR plus a margin of 2.25% with a "LIBOR floor" of 0.50% or (b) Base Rate plus a margin of 1.25%, with a "Base Rate floor" of 1.50%. Loans under the Revolving Facility bear interest, initially, at a rate equal to, at the option of the Company either (a) Adjusted LIBOR plus a margin of 2.00% with a "LIBOR floor" of 0.00% or (b) Base Rate plus a margin of 1.00% with a "Base Rate floor" of 1.00%. Pricing on each of the Bank Facilities is expected to include a 25 basis point step-down to the respective interest rate margins upon the achievement and maintenance of a total net leverage ratio of 3.75:1.00 or lower or upon the public announcement that the Company's corporate credit rating from each of Moody's and S&P is equal to or better than Ba2 or BB, respectively.
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In addition to paying interest on outstanding principal under the Term Facility
and the Revolving Facility, the Company is required to pay a commitment fee,
payable quarterly in arrears, of 0.50% per annum on the average daily unused
portion of the Revolving Facility, with step-downs (x) to (i) 0.375% and (ii)
0.25% per annum on such portion upon achievement of a total net leverage ratio
equal to or less than (i) 4.75x and (ii) 3.75x, respectively, and (y) an
additional 0.125% per annum upon the public announcement that the Company's
corporate credit rating from each of Moody's and S&P is equal to or better than
Ba2 or BB, respectively. The commitment fee shall, however, in no event be less
than 025% per annum. The commitment fee will initially be set at 0.375% per
annum until the date the Company delivers the applicable financial statements
for the quarter ending
Prepayments
The borrowers are required, subject to certain exceptions, to pay outstanding
loans under the Term Facility, (i) commencing with the fiscal year ending
The borrowers may voluntarily repay outstanding loans under the Term Facility and the Revolving Facility at any time without premium or penalty, except in connection with, or resulting in, any repricing event. In addition, the borrowers may elect to permanently terminate or reduce all or a portion of the revolving credit commitments and the letter of credit sub-limit under the Revolving Facility at any time without premium or penalty.
Amortization and Maturity
The borrowers are required to repay installments on the term loans in quarterly
principal amounts equal to 0.25% of the original principal amount of the term
loan borrowed on the Closing Date on the last business day of each June,
September, December and March of each year, with the balance payable on
The entire principal amount of revolving loans outstanding (if any) under the
Revolving Facility are due and payable in full at maturity on
Guarantees
All obligations under the New Credit Agreement are unconditionally guaranteed on
a senior basis by, subject to certain exceptions, each existing and subsequently
acquired or organized direct or indirect wholly owned restricted subsidiary of
the Company organized in the
Security
The obligations of the borrowers under the New Credit Agreement and the guarantees are secured, subject to certain exceptions and excluded assets, by (i) the equity securities of the Co-Borrower and each guarantor, and of each direct, restricted subsidiary of the Company, the Co-Borrower and of each subsidiary guarantor and (ii) security interests in, and mortgages on, substantially all personal property and material owned real property of the Company and each subsidiary guarantor.
Covenants and Events of Default
The New Credit Agreement includes negative covenants limiting the ability of the Company and its restricted subsidiaries to incur indebtedness and liens, sell assets and make restricted payments, including dividends and investments, subject to certain exceptions. In addition, the New Credit Agreement also contains other customary affirmative and negative covenants and customary events of default (with customary grace periods, as applicable).
Certain negative covenants are subject to customary investment grade fall-away provisions if the Company has a public corporate credit/family ratings that is investment grade from Moody's and S&P (so long as there is no ongoing event of default) and will be reinstated if the ratings condition is no longer met.
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If an event of default occurs the Administrative Agent shall, at the request of, or may, with the consent of the required lenders, (i) terminate lenders' commitments under the New Credit Agreement, (ii) declare any outstanding loans under the New Credit Agreement to be immediately due and payable, (iii) require that the Company cash collateralize the letter of credit obligations and . . .
Item 1.02. Termination of a Material Definitive Agreement.
On
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 under Item 1.01 above is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following documents are attached as exhibits to this Current Report on Form 8-K: Exhibit No. Description 10.1 Credit Agreement, dated as ofJanuary 13, 2021 , by and amongPPD, Inc. ,PPD Development, L.P. , each lender from time to time party thereto, each L/C Issuer party thereto andJPMorgan Chase Bank, N.A ., as Administrative Agent, Collateral Agent and a L/C Issuer
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