Funko, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Funko, Inc. on February 13, 2026. The filing discloses the entry into a Material Definitive Agreement regarding the company's credit facilities.
Key Financial Metrics and Debt Structure
The filing details significant amendments to the company's Existing Credit Agreement, dated September 17, 2021. Key financial terms modified include:
- Loan Maturity: Extended from September 17, 2026, to December 31, 2027.
- Interest Margin: Increased to 450 basis points on all outstanding loans effective immediately, with provisions for subsequent increases.
- Amortization: Modified amortization payments on term loans and new requirements for amortization on outstanding revolving loans, which permanently reduce revolving commitments.
- Mandatory Prepayments: Required quarterly prepayment of revolving loans using cash and cash equivalents in excess of $50 million.
- Spread Adjustment: Removed the 10 basis points credit spread adjustment applicable to SOFR loans.
The filing text does not provide specific values for total revenue, profit, cash flow, or current debt balances.
Material Changes and Covenant Modifications
The Fifth Amendment introduces material changes to financial covenants to provide the company with additional flexibility:
- Fixed Charge Coverage Ratio: Waived for the quarters ended December 31, 2025, March 31, 2026, and June 30, 2026. Additional cushion provided for quarters ending September 30, 2026, December 31, 2026, and March 31, 2027.
- Net Leverage Ratio: Waived for the quarters ended December 31, 2025, March 31, 2026, June 30, 2026, and September 30, 2026.
- New EBITDA Covenant: Introduced a minimum EBITDA covenant for the six-month period ending June 30, 2026.
- Voluntary Prepayment Option: Permits the company to forego testing certain financial covenants if a voluntary prepayment of at least $10 million is made prior to the delivery of a compliance certificate.
Outlook, Risks, and Contingencies
The amendment reflects a restructuring of debt terms to manage liquidity and covenant compliance. Risks associated with this filing include:
- Increased Cost of Capital: The immediate increase in the applicable margin to 450 basis points will raise interest expenses.
- Liquidity Constraints: Mandatory prepayments of excess cash (over $50 million) and amortization requirements may limit available liquidity for operations or strategic initiatives.
- Default Risk: The agreement adds certain additional events of default.
The filing does not contain specific forward-looking guidance on revenue or earnings.
Investor Verification Checklist
- Verify the full text of the Fifth Amendment (Exhibit 10.1) for specific definitions of the new EBITDA covenant and the schedule of subsequent margin increases.
- Review the company's most recent quarterly report (10-Q) to assess current cash balances against the new $50 million excess cash prepayment threshold.
- Monitor compliance with the new minimum EBITDA covenant for the period ending June 30, 2026.
- Assess the impact of the increased interest margin on future net income and cash flow projections.