Business Context and Reporting Period
Marcus & Millichap, Inc. (NYSE: MMI) filed a Form 8-K on May 28, 2019, reporting the entry into a material definitive agreement. The filing details the amendment and restatement of the company's credit facility with Wells Fargo Bank, National Association.
Key Financial Metrics and Liquidity
The filing focuses on liquidity arrangements rather than operational performance metrics for a specific period. Key financial terms of the new agreement include:
- Credit Facility Size: $60 million senior secured revolving credit facility.
- Maturity Date: June 1, 2022.
- Letters of Credit: $10 million sublimit available.
- Interest Rates: Borrowings bear interest at either (i) Base Rate minus 2.00% or (ii) LIBOR plus 0.875%.
- Unused Fee: Quarterly fee ranging from 0.0% to 0.1% on unutilized commitments.
- Current Drawdown: The company has no current plans to draw down on the facility.
Material Changes Versus Prior Period
The primary material change is the replacement of the Credit Agreement dated June 1, 2014, with the new Amended and Restated Credit Agreement. The new agreement extends the maturity date to 2022 and establishes updated interest rate spreads and fee structures compared to the prior facility.
Guidance, Risks, and Covenants
The filing outlines specific financial covenants the company must maintain on a combined basis with its guarantors:
- EBITDAR Coverage Ratio: Must not be less than 1.25:1.0 as of each quarter end.
- Debt to EBITDA: Total funded debt to EBITDA must not exceed 2.0:1.0.
The facility is secured by all personal property assets of the company and its subsidiaries, with specific exceptions for capital stock of controlled foreign corporations. The filing does not provide forward-looking guidance on revenue or earnings, nor does it disclose specific risks beyond standard covenant compliance and events of default.
Investor Verification Checklist
- Verify the company's current EBITDAR and EBITDA figures to ensure compliance with the 1.25:1.0 and 2.0:1.0 covenants.
- Confirm the status of the $60 million facility to ensure no unexpected drawdowns have occurred since the filing date.
- Review the full text of Exhibit 10.1 (Amended and Restated Credit Agreement) for detailed definitions of "Base Rate" and "EBITDAR."
- Monitor future filings for any events of default or covenant waivers.