01—Abstract
Summary
Summary of the 8-K filed September 16, 2024. Cited figures are marked; the original filing is the authoritative source.
Reliance, Inc. (RS) entered into a Second Amended and Restated Credit Agreement dated September 10, 2024, with Bank of America N.A. as Administrative Agent and a group of other lenders.
The agreement amends and restates the company's existing credit agreement dated September 3, 2020. It provides a five-year, senior unsecured revolving credit facility of $1.5 billiona, including a $150 million letter of credit sublimit and a $50 million swing line loan sublimit. As of September 10, 2024, the company had approximately $82 million of borrowings outstanding.
Proceeds may be used for general corporate purposes, growth and stockholder return activities. Pricing is set at SOFR plus 1.00%b initially, rising to a range of SOFR plus 1.00% to 1.50% based on the Total Net Leverage Ratio after delivery of the compliance certificate for the quarter ending September 30, 2024. The unused commitment fee is 0.10% initially, ranging from 0.10% to 0.20% per annum based on the same leverage ratio.
The facility is not guaranteed by subsidiaries and is unsecured. The agreement removes the interest coverage ratio covenant from the existing agreement, leaving a maximum total net leverage ratio as the only financial maintenance covenant. The filing describes the new facility as a refinancing and modification of existing revolving credit terms, with customary representations, covenants, and events of default, including a change of control default.
Borrowings may be prepaid at any time without premium. The full agreement is filed as Exhibit 10.1.
02—Key points
Key Highlights
- Entered a Second Amended and Restated Credit Agreement on September 10, 2024, amending and restating the agreement dated September 3, 2020.
- Five-year senior unsecured revolving credit facility totaling $1.5 billion, with a $150 million letter of credit sublimit and a $50 million swing line sublimit.
- Approximately $82 million of borrowings outstanding under the facility as of September 10, 2024.
- Initial pricing of SOFR plus 1.00%, adjustable to SOFR plus 1.50% based on the Total Net Leverage Ratio after the quarter ending September 30, 2024.
- Initial unused commitment fee of 0.10% per annum, adjustable up to 0.20% based on the Total Net Leverage Ratio.
- The interest coverage ratio covenant was deleted; a maximum total net leverage ratio is now the only financial maintenance covenant.
- The facility is unsecured and not guaranteed by any subsidiaries; borrowings can be prepaid at any time without premium.
03—Questions
Frequently Asked Questions
How large is the new credit facility and what can the proceeds be used for?
The revolving credit facility is $1.5 billion in aggregate amount. The company may use borrowings for general corporate purposes, growth and stockholder return activities.
How much was drawn on the facility at signing?
As of September 10, 2024, the company had approximately $82 million of borrowings outstanding under the Credit Agreement.
How is the borrowing cost determined?
Borrowings bear interest at SOFR or an alternate base rate, plus an applicable margin. The initial margin is SOFR plus 1.00%, which can rise to SOFR plus 1.50% depending on the Total Net Leverage Ratio after the compliance certificate for the quarter ending September 30, 2024 is delivered.
What covenant changes does the new agreement include?
The interest coverage ratio from the existing agreement was deleted. A maximum total net leverage ratio is now the only remaining financial maintenance covenant.
Is the facility secured, and can it be repaid early?
The facility is unsecured and not guaranteed by any of the company's subsidiaries. Outstanding borrowings may be prepaid at any time without premium.
04—Continue