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 July 11, 2024, reporting events occurring on July 10, 2024. The filing details the entry into a new material definitive agreement regarding the company's credit facilities.
Key Financial Metrics and Facility Details
The filing does not provide current revenue, profit, cash flow, or margin data. The primary financial event is the restructuring of the company's revolving credit facility:
- New Facility Size: $250.0 million senior secured revolving credit facility.
- Previous Facility Size: $185.0 million.
- Borrower: Hawk Parent Holdings LLC (a subsidiary), guaranteed by Repay Holdings Corporation.
- Security: First priority security interest in substantially all tangible and intangible property of the Company and subsidiaries.
- Interest Rates: Term SOFR plus 1.75% to 2.75%, or Base Rate plus 0.75% to 1.75%, based on the total net leverage ratio.
- Maturity: The earlier of the fifth anniversary of the Closing Date, or 91 days prior to the maturity of the Company's 2026 or 2029 Convertible Senior Notes.
Material Changes Versus Prior Period
The company increased its available revolving credit capacity by $65.0 million, raising the aggregate principal amount from $185.0 million to $250.0 million. The agreement also introduces specific financial covenants not explicitly detailed in the prior agreement summary within this text:
- Maximum Secured Net Leverage Ratio: 2.0 to 1.0 (or 2.5 to 1.0 for a limited period following a material acquisition).
- Minimum Interest Coverage Ratio: 3.0 to 1.0.
- Debt Calculation Adjustment: Indebtedness for leverage ratios is reduced by unrestricted cash and permitted investments up to the greater of $86.0 million or 65% of consolidated EBITDA.
Guidance, Risks, and Covenants
The filing does not contain forward-looking revenue guidance or management commentary on operational performance. However, it outlines significant restrictive covenants and risks associated with the new debt:
- Restrictive Covenants: Limitations on incurrence of additional debt, liens, investments, mergers, dispositions, and specified uses of cash (including dividends and distributions).
- Liquidity Risk: The facility maturity is tied to the maturity of existing convertible notes, creating a potential refinancing or liquidity event in the near term relative to the note maturities.
- Compliance Risk: Failure to maintain the required leverage and interest coverage ratios could result in a default.
Investor Verification Checklist
- Verify the current outstanding balance on the new $250.0 million facility versus the previous $185.0 million facility.
- Confirm the company's current consolidated EBITDA to assess compliance with the 2.0x secured net leverage ratio and 3.0x interest coverage ratio.
- Review the maturity dates of the 0.00% Convertible Senior Notes due 2026 and 2.875% Convertible Senior Notes due 2029 to understand the facility's earliest potential maturity date.
- Examine the full text of Exhibit 10.1 for specific definitions of "qualified cash" and "permitted investments" used in leverage calculations.
- Check for any existing defaults or waivers under the prior credit agreement that may have influenced this amendment.