Business Context and Reporting Period
This Form 8-K was filed by Artisan Partners Asset Management Inc. on December 7, 2021. The filing reports on a material definitive agreement entered into by Artisan Partners Holdings LP ("Holdings"), of which Artisan Partners Asset Management Inc. is the sole general partner.
Key Financial Metrics and Obligations
The filing details a new debt obligation rather than reporting period-end financial results. Key terms of the new financing include:
- Instrument: $90 million of Series F Senior Notes.
- Issuance Date: Scheduled for August 16, 2022, subject to closing conditions.
- Maturity Date: August 16, 2032.
- Interest Rate: 3.10% per annum.
- Guarantor: Artisan Partners Limited Partnership, a wholly-owned subsidiary of Holdings.
Material Changes and Covenants
The agreement establishes specific financial covenants and prepayment triggers that represent material constraints on the company's operations:
- Leverage Ratio: Holdings must not permit its Leverage Ratio to exceed 3.00 to 1.00.
- Interest Coverage Ratio: Holdings must not permit its Interest Coverage Ratio for any four consecutive fiscal quarters to be less than 4.00 to 1.00.
- Prepayment Triggers: Holdings is generally required to offer to pre-pay the notes upon a Change in Control or if Artisan's average Assets Under Management (AUM) for a fiscal quarter falls below $45 billion.
Guidance, Risks, and Contingencies
The filing does not provide updated financial guidance or management commentary on future performance. However, it outlines significant risks associated with the new debt:
- Events of Default: The agreement includes customary events of default. Upon such an event, the Series F Notes generally become due and payable.
- AUM Contingency: The requirement to pre-pay if average quarterly AUM drops below $45 billion introduces a liquidity risk tied directly to asset flows.
Investor Verification Checklist
- Verify the current Assets Under Management (AUM) levels to assess proximity to the $45 billion prepayment trigger.
- Review the company's current Leverage and Interest Coverage ratios to ensure compliance with the new 3.00 and 4.00 covenants.
- Confirm the status of closing conditions for the August 16, 2022, issuance date.
- Examine the full Note Purchase Agreement (Exhibit 10.1) for detailed definitions of "Leverage Ratio," "Interest Coverage Ratio," and "Change in Control."