Business Context and Reporting Period
Evercore Partners Inc. filed a Form 8-K on March 30, 2016, reporting the entry into a material definitive agreement involving a private placement of senior notes. The company is a Delaware corporation headquartered in New York, New York.
Key Financial Metrics and Debt Structure
The company issued a total of $170,000,000 in aggregate principal amount of senior notes across four series:
- Series A Notes: $38,000,000 at 4.88% interest, due March 30, 2021.
- Series B Notes: $67,000,000 at 5.23% interest, due March 30, 2023.
- Series C Notes: $48,000,000 at 5.48% interest, due March 30, 2026.
- Series D Notes: $17,000,000 at 5.58% interest, due March 30, 2028.
Interest is payable semi-annually in arrears, commencing September 30, 2016. The notes are fully and unconditionally guaranteed by Evercore LP and Evercore Group Holdings L.P., with an additional guarantee from Evercore Partners Services East L.L.C. expected by June 30, 2016.
Material Changes and Use of Proceeds
The primary material change is the addition of $170 million in long-term debt. The company intends to use a portion of the net proceeds to:
- Repay outstanding borrowings under its term loan with Mizuho Bank, Ltd.
- Reduce borrowings under its current line of credit with First Republic Bank.
Remaining net proceeds will be used for general corporate purposes. This filing does not provide specific revenue, profit, or cash flow figures for the period.
Covenants, Risks, and Management Commentary
The Note Purchase Agreement includes specific financial covenants that the company must maintain:
- Maximum Consolidated Leverage Ratio: 2.0 to 1.0 over any four consecutive fiscal quarters.
- Minimum Consolidated Interest Coverage Ratio: 2.5 to 1.0 over any four consecutive fiscal quarters.
- Minimum Consolidated Tangible Net Worth: $324,834,000 as of the last day of any fiscal quarter.
Prepayment and Change of Control: The issuer may prepay the notes (minimum 5% of aggregate principal) at 100% of principal plus a "make-whole" amount. Upon a change of control, holders have the right to require immediate prepayment of the entire unpaid principal plus accrued interest.
Risks: The agreement contains customary events of default which, if triggered, could require immediate payment of principal and interest.
Investor Verification Checklist
- Verify the exact amount of Mizuho Bank term loan and First Republic Bank line of credit repayments funded by this issuance.
- Confirm the company's current leverage and interest coverage ratios against the new 2.0 and 2.5 covenants.
- Review the full text of the Note Purchase Agreement (Exhibit 10.1) for detailed definitions of "Maximum Consolidated Leverage Ratio" and "Minimum Consolidated Tangible Net Worth."
- Monitor the status of the additional guarantee from Evercore Partners Services East L.L.C. by the June 30, 2016 deadline.