Repay Holdings Corp. 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Repay Holdings Corporation (RPAY) on February 5, 2021, covering events occurring on February 3, 2021. The filing details the entry into a new material definitive agreement regarding the company's credit facilities following a recent public offering.
Key Financial Metrics and Debt Structure
- New Facility: Established a $125.0 million senior secured revolving credit facility.
- Recent Capital Raise: On January 19, 2021, the company raised approximately $570.7 million net from a common stock offering and $440.0 million in 0.00% Convertible Senior Notes due 2026.
- Debt Repayment: On January 20, 2021, the company used offering proceeds to prepay in full $216.0 million in term loans and terminated $100.0 million in delayed draw term loan commitments under the prior agreement.
- Interest Rates: The new facility bears interest at adjusted LIBOR plus 1.75% to 3.0%, or a base rate plus 0.75% to 2.0%, based on leverage ratios.
- Maturity: The facility matures on the earlier of the fifth anniversary of the closing date or 91 days prior to the maturity of the Convertible Notes.
Material Changes Versus Prior Period
The company replaced its Prior Credit Agreement (dated July 11, 2019), which included a $30.0 million revolver, $100.0 million delayed draw term loans, and $216.0 million term loans. The new Amended Credit Agreement consolidates the debt structure into a single $125.0 million revolving facility, eliminating the term loan components previously held.
Covenants, Risks, and Management Commentary
- Financial Covenants: The agreement requires a maximum secured net leverage ratio of 2.0 to 1.0 (or 2.5 to 1.0 temporarily following a material acquisition) and a minimum interest coverage ratio of 3.0 to 1.0.
- Restrictive Covenants: The agreement limits the incurrence of additional debt, liens, investments, mergers, and dispositions. It also restricts specified uses of cash, including dividend payments.
- Collateral: The facility is secured by a first priority security interest in substantially all tangible and intangible property of the company and its subsidiaries.
- Prepayment: The company may prepay the facility without premium.
Investor Verification Checklist
- Verify the exact terms of the "total net leverage ratio" and "secured net leverage ratio" calculations, specifically the treatment of unrestricted cash deductions (capped at the greater of $50.0 million or 65% of EBITDA).
- Confirm the maturity date of the Convertible Senior Notes due 2026 to determine the hard stop date for the revolving credit facility.
- Review the full text of Exhibit 10.1 (Amended and Restated Revolving Credit Agreement) for specific definitions of "qualified cash" and "consolidated EBITDA."
- Monitor compliance with the 3.0 to 1.0 interest coverage ratio given the company's current interest expense profile.