8-KMaterial AgreementsFinancial EventsExhibits & Filings

TAKE TWO INTERACTIVE SOFTWARE INC 8-K Report, Material Agreement (Jul 9, 2007)

Filed July 9, 2007For Securities:TTWO

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.

Frequently Asked Questions

The primary purpose of the new Credit Agreement is to provide Take-Two Interactive Software, Inc. with a significant revolving credit facility of up to $100 million. The funds will be used to cover transaction costs, repay existing debt owed to foreign subsidiaries, and finance general corporate activities such as working capital, capital expenditures, and other operational needs.

The Credit Facility is a $100 million revolving credit line maturing on July 3, 2012. It is secured by substantially all of the U.S. assets of the company and its domestic subsidiaries, and is guaranteed by these subsidiaries. The borrowing capacity is tied to a borrowing base calculated on eligible accounts receivable and inventory, plus a fixed amount.

The credit agreement imposes several restrictions on Take-Two and its domestic subsidiaries, including limitations on incurring new debt (except permitted types), disposing of assets outside the ordinary course, mergers, creating liens, making investments, and paying dividends, all subject to specified exceptions. It also outlines events of default.

This new $100 million credit facility is expected to enhance Take-Two's financial flexibility by providing access to capital for operations, investments, and potential future needs. The secured nature and the borrowing base calculation suggest a reliance on the company's tangible assets for securing the debt, while the repayment of intercompany debt could streamline its financial structure.