Summary
Take-Two Interactive Software, Inc. (TTWO) announced on July 3, 2007, that it has entered into a new Credit Agreement and a related Security Agreement. This new financing facility provides the company with a revolving credit line of up to $100 million, maturing in July 2012. The facility is secured by substantially all of the U.S. assets of the company and its domestic subsidiaries and is guaranteed by these subsidiaries. The proceeds from this credit facility are earmarked for several key purposes: covering transactional fees, repaying existing debt to foreign subsidiaries, and funding general corporate needs including working capital and capital expenditures. This move appears to be a strategic step to bolster the company's financial flexibility and support its ongoing operations and growth initiatives.
Key Highlights
- 1New $100 million revolving credit facility secured by U.S. assets, maturing in July 2012.
- 2Proceeds to be used for transactional fees, debt repayment to foreign subsidiaries, and general corporate purposes.
- 3The credit facility is guaranteed by domestic subsidiaries and secured by their assets.
- 4Borrowing base is determined by eligible accounts receivable (85%) and eligible inventory (65%), plus a fixed $25 million.
- 5Interest rates are variable, based on a base rate or LIBOR, plus a margin that adjusts with liquidity levels.
- 6The agreement includes standard covenants and events of default, with specific restrictions on debt, asset disposal, mergers, liens, investments, and dividend payments.
- 7A financial covenant requiring an interest coverage ratio will be triggered if domestic liquidity falls below $30 million after October 31, 2007.