01—Abstract
Summary
Summary of the 8-K filed December 5, 2024. Cited figures are marked; the original filing is the authoritative source.
LPL Financial Holdings Inc. announced the closing of a leverage neutral transaction to refinance its existing Term Loan B facility with a new Term Loan A facility, which the company expects to produce annual cash interest expense savings of approximately $4 milliona.
Under the ninth amendment to its amended and restated credit agreement, dated December 5, 2024, the Borrower refinanced the $1,019,175,000b outstanding under its Term Loan B with a new $1,020,000,000 Term Loan A maturing December 5, 2026. The amendment also releases the subsidiary guarantors' guarantees and all security interests and liens securing the Borrower's obligations under the Credit Agreement, and suspends certain restrictive covenants.
The Term Loan A bears interest at a floating rate of Adjusted Term SOFR plus 137.5 basis points as of December 5, 2024, compared with Adjusted Term SOFR plus 175 basis points under the Term Loan B, and carries no required amortization, mandatory prepayments (other than debt incurrence prepayment events), or prepayment premiums. The Borrower must still comply with a maximum Consolidated Total Debt to Consolidated EBITDA ratio and a minimum Consolidated EBITDA to Consolidated Interest Expense ratio, tested quarterly, which are the same financial performance covenants applicable to the existing revolving facility, subject to equity cure rights.
02—Key points
Key Highlights
- Refinanced the $1,019,175,000 Term Loan B with a new $1,020,000,000 Term Loan A in a leverage neutral transaction
- Expected annual cash interest expense savings of approximately $4 million
- Term Loan A margin reduced to Adjusted Term SOFR plus 137.5 basis points, versus 175 basis points under the Term Loan B
- Term Loan A matures December 5, 2026 with no required amortization, mandatory prepayments (other than debt incurrence prepayment events), or prepayment premiums
- Subsidiary guarantees and all security interests and liens securing the Borrower's obligations were released
- Certain restrictive covenants were suspended; financial maintenance covenants match those of the existing revolving facility
- Filed under Item 1.01 and Item 2.03; the Ninth Amendment is filed as Exhibit 10.1
03—Questions
Frequently Asked Questions
What is the purpose of the transaction?
The transaction refinances the existing Term Loan B facility with a new Term Loan A facility in a leverage neutral transaction, which the company expects to result in annual cash interest expense savings of approximately $4 million.
How much debt was refinanced and what is the new facility size?
The amendment refinanced the $1,019,175,000 outstanding under the Term Loan B with a new $1,020,000,000 Term Loan A facility.
What are the new interest rate terms?
As of December 5, 2024, Term SOFR Rate Loans bear interest at the Adjusted Term SOFR Rate (which includes a 10 basis points per annum credit spread adjustment) plus 137.5 basis points per annum, compared with Adjusted Term SOFR Rate plus 175 basis points under the Term Loan B. The Adjusted Term SOFR Rate has a 0.0% floor and the alternate base rate has a 1.0% floor.
What changed about collateral and guarantees?
The amendment releases the guarantees provided by the subsidiary guarantors and releases all security interests and liens granted to the collateral agent by the Borrower, LPL Financial Holdings Inc. and the Subsidiary Guarantors that secured the Borrower's obligations under the Credit Agreement.
When does the Term Loan A mature and what repayment terms apply?
The Term Loan A matures on December 5, 2026. It has no required amortization payments, no mandatory prepayments (other than in connection with a debt incurrence prepayment event), and no prepayment premiums.
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