What was the primary purpose of the new Term Loan and the amended ABL Credit Agreement?

The primary purpose of these financing arrangements was to refinance existing indebtedness of Vertiv Group Corporation and its parent, Vertiv Intermediate Holding Corporation, as well as to cover related fees and expenses. The amended ABL Credit Agreement also provides ongoing access to capital for working capital and general corporate purposes.

What is the total amount of the new Term Loan and the ABL Credit Facility?

The new Term Loan is for $2.2 billion. The amended ABL Credit Agreement provides for revolving loans up to $455 million, with the possibility of increasing commitments to $600 million.

What are the key terms of the new Term Loan regarding interest rates and maturity?

The Term Loan has a seven-year maturity and begins to amortize at a rate of 1% per annum starting June 30, 2020. The interest rate is variable, selectable by the borrower between a base rate plus 2.00% or LIBOR plus 3.00%.

How is the collateral structured between the Term Loan and the ABL Credit Facility?

An intercreditor agreement governs the liens on collateral. The Term Agent has a first priority lien on 'fixed assets' (like real estate and equipment) and a second priority lien on 'current assets' (like accounts receivable and inventory). Conversely, the ABL Agent has a first priority lien on current assets and a second priority lien on fixed assets. The ABL Agent also has a first priority lien on certain foreign collateral, which is not available to the Term Agent.

VRT 8-K: Financial Events & Shareholder Matters

Summary

Vertiv Holdings Co. (VRT) filed an 8-K on March 2, 2020, detailing significant financing activities. The company entered into a new $2.2 billion senior secured term loan facility and amended its existing revolving credit facility. These actions were primarily undertaken to refinance existing indebtedness of Vertiv Group Corporation and its parent, Vertiv Intermediate Holding Corporation, and to cover associated fees and expenses. This move represents a substantial restructuring of the company's debt obligations, establishing new credit facilities that will be crucial for its ongoing operations and strategic initiatives. The new term loan has an initial term of seven years and features an amortization schedule of 1% per annum, with interest rates tied to either a base rate or LIBOR plus a spread. The revolving credit facility, amended and restated, provides up to $455 million in revolving loans, with an option to increase commitments to $600 million. The proceeds from these facilities will be used for refinancing and general corporate purposes, including working capital. The structure of these agreements, including covenants, events of default, and collateral arrangements, is detailed within the filing and will be important for investors to monitor.

Key Highlights

1Entry into a new $2.2 billion senior secured Term Loan Credit Agreement by Vertiv Group Corporation, an indirect subsidiary.
2The proceeds from the Term Loan, along with borrowings from the ABL Credit Agreement, were used to refinance existing indebtedness.
3Amendment No. 5 to the Revolving Credit Agreement (ABL Credit Agreement) was entered into, providing for up to $455 million in revolving loans, with potential for increase to $600 million.
4The Term Loan has a seven-year maturity and features an amortization of 1% per annum.
5Interest rates for the Term Loan are variable, based on either a base rate or LIBOR plus a spread.
6The ABL Credit Agreement allows for borrowings to be used for working capital and general corporate purposes going forward.
7Details on collateral arrangements are provided, with the Term Agent holding a first lien on fixed assets and a second lien on current assets, while the ABL Agent holds a first lien on current assets and a second lien on fixed assets.

Vertiv Holdings Co 8-K Report, Financial Obligation (Mar 3, 2020)

Summary

Key Highlights

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