What is the primary purpose of this new Credit Agreement?

The primary purpose of the Credit Agreement is to provide Axon Enterprise, Inc. with financial flexibility for general corporate purposes, including funding working capital needs and pursuing strategic permitted acquisitions.

What is the maximum amount Axon can borrow under this facility?

The facility is initially set at $200 million, with an option for Axon to request an increase up to $300 million, subject to lender approval. Additionally, $30 million of the facility is available for letters of credit.

What are the key financial covenants Axon must adhere to?

Axon must comply with covenants including financial reporting, limitations on indebtedness and liens, and must maintain a maximum net leverage ratio of no greater than 3.50 to 1.00 and a minimum interest coverage ratio of no less than 3.50 to 1.00, both calculated on a trailing four fiscal quarter basis.

When does this credit facility mature?

The Credit Agreement matures on December 15, 2027, or six months prior to the maturity date of Axon's 0.50% Convertible Senior Notes due 2027, whichever comes first, provided the notes have not been fully redeemed, repurchased, converted, or defeased.

AXON 8-K: Material Agreements & Financial Events

Summary

Axon Enterprise, Inc. (AXON) announced on December 19, 2022, the execution of a new Credit Agreement, effective December 15, 2022. This agreement establishes a senior unsecured multi-currency revolving credit facility with a principal amount of up to $200 million, which includes an option to increase it to $300 million at the company's request and lender approval. The facility is designed to provide flexibility for general corporate purposes, including working capital needs and strategic acquisitions. The Credit Agreement has a maturity date of December 15, 2027, with certain conditions tied to the maturity of their convertible senior notes. The interest rates on borrowings will be floating, based on various benchmark rates like SOFR, EURIBOR, TIBOR, or RFR, plus an applicable margin determined by Axon's net leverage ratio. The company will also pay a commitment fee on the unused portion of the facility. Covenants include financial reporting, limitations on debt and liens, and a requirement to maintain a maximum net leverage ratio of 3.50:1.00 and a minimum interest coverage ratio of 3.50:1.00.

Key Highlights

1Axon entered into a new $200 million senior unsecured multi-currency revolving credit facility, with an accordion feature allowing for an increase up to $300 million.
2Proceeds from the facility are designated for general corporate purposes, including working capital and permitted acquisitions.
3The credit facility matures on December 15, 2027, with specific provisions related to the maturity of Axon's convertible senior notes.
4Interest rates will be floating, referencing benchmarks such as SOFR, and will include an applicable margin tied to the company's net leverage ratio.
5A commitment fee of 0.15% per annum will be charged on the unused portion of the credit facility.
6The agreement includes affirmative and negative covenants, such as financial reporting and limitations on indebtedness and liens.
7Axon must maintain a maximum net leverage ratio of 3.50:1.00 and a minimum interest coverage ratio of 3.50:1.00.

AXON ENTERPRISE, INC. 8-K Report, Material Agreement (Dec 19, 2022)

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