SYLVAMO CORPORATION Item 1.01 Entry into a Material Definitive Agreement.
On
Under the Securitization Program, Subsidiary will sell, on a continuous revolving basis and without recourse, all domestically originated trade accounts receivable (the "Receivables") together with the rights to collections thereof, related security and certain related rights (including proceeds from qualified insurance providers) to the Borrower, unless such Receivables and related obligors are specifically excluded under the Securitization Program.
The Borrower was formed for the sole purpose of buying, owning and borrowing against the Receivables, and the Receivables will comprise substantially all of the assets of the Borrower. The Borrower will borrow funds from the Lenders secured by a perfected, first priority security interest in the Receivables and all other assets of the Borrower in favor of the Agent for the benefit of the Secured Parties. The Borrower will pay Subsidiary and any other Originators the purchase price of the Receivables with funds borrowed from the Lenders, collections and other proceeds of such Receivables it owns and/or, solely in the case of Subsidiary, by recording contributions thereof to the capital account of Subsidiary, in the form of an equity contribution. Any amount not paid in cash or as a capital contribution will be recorded as an intercompany loan under a subordinated note issued by the Borrower in favor of the respective Originator, which loan will be repaid at a later date when the Borrower has cash available therefor.
Cash paid over to the Originators as payment for the Receivables will be available to such entities for general corporate purposes.
The Company will guarantee certain performance, undertakings and indemnity obligations of Subsidiary and the other Originators, in their capacity as originators and sub-servicers under the Securitization Program, but will not guarantee the payment of the debt under the Receivables Financing Agreement, obligations of customers of Subsidiary and the other Originators who are the obligors under the contracts that give rise to the Receivables, or collectibility of the Receivables on account of bankruptcy, insolvency or lack of credit worthiness or other financial inability of the obligor to pay or any form of uncollectibility of such Receivables that would constitute credit recourse.
The maximum aggregate principal amount that the Borrower may borrow under the
Securitization Program at any time is
The Receivables Financing Agreement contains various customary affirmative and
negative covenants, and it also contains customary default and termination
provisions which provide for acceleration of amounts owed under the Receivables
Financing Agreement upon the occurrence of certain specified events, including,
but not limited to, the failure to pay interest and other amounts due, cross
defaults to the Company's senior secured credit agreement, defaults on certain
indebtedness, certain judgments, insolvency events, a change in control of
Subsidiary or the Borrower, as well as the breach of certain performance
triggers designed to measure the performance of the pool of Receivables securing
borrowings under the Securitization Program. The Securitization Program has a
scheduled termination date of
Subsidiary will continue to service the Receivables for a servicing fee, and as such administer, collect and otherwise enforce the Receivables on behalf of the Borrower and the Secured Parties. Subsidiary, as servicer and an Originator, and the Borrower are required to instruct the obligors on the Receivables to make payments to, and remit any payments received from such obligors into, the collection accounts over which the Agent will be assigned control under the terms of the Receivables Financing Agreement.
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The Company will account for the Securitization Program as a secured borrowing for accounting purposes and will treat the Securitization Program as indebtedness for federal income tax purposes. Once sold to the Borrower, the Receivables, together with the related security, assets and rights to collection described above, will be separate and distinct from Subsidiary's and the other Originators' own assets, and Subsidiary and such other Originators are required to represent to their creditors that such assets belong solely to Borrower and will not be available to such creditors.
The foregoing summary of the Purchase and Sale Agreement, the Receivables Financing Agreement and the Performance Guaranty is qualified in its entirety by reference to the text of such agreements, which are filed as Exhibits 10.1, 10.2 and 10.3 hereto, respectively, and are incorporated herein by reference.
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Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Company.
The information set forth above under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits Exhibit No. Description 10.1* Purchase and Sale Agreement, dated as ofSeptember 30, 2022 , amongSylvamo North America, LLC , as servicer and originator, the other originators from time to time party thereto, andSylvamo Receivables, LLC , as buyer 10.2* Receivables Financing Agreement, dated as ofSeptember 30, 2022 , amongSylvamo Receivables, LLC , as borrower,Sylvamo North America, LLC , as initial servicer, the lenders party thereto from time to time,PNC Bank, National Association , as administrative agent and a lender, andPNC Capital Markets LLC , as structuring agent 10.3 Performance Guaranty, dated as ofSeptember 30, 2022 , bySylvamo Corporation , as performance guarantor, in favor ofPNC Bank, National Association , as administrative agent for the benefit of the secured parties 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Schedules and exhibits have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.Sylvamo hereby undertakes to furnish any of the omitted schedules or exhibits supplementally upon request by theSecurities and Exchange Commission .
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