Funko, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Funko, Inc. on May 5, 2020. The filing details a material definitive agreement entered into on the same date regarding the company's credit facilities.
Key Financial Metrics and Debt
The filing does not report specific revenue, profit, or cash flow figures for a reporting period. Instead, it outlines new financial covenants and liquidity requirements:
- Minimum Liquidity: The company must maintain a minimum liquidity of at least $30.0 million.
- Leverage Ratio: The liquidity requirement remains in effect until the Leverage Ratio for the most recently ended four consecutive fiscal quarters is less than 2.50 to 1.00.
- Interest and Fees: Interest and fees payable under the Credit Agreement have been increased effective from the date of the amendment.
Material Changes Versus Prior Period
The primary material change is the execution of the Third Amendment to the Credit Agreement (originally dated October 22, 2018). Key modifications include:
- Covenant Waiver: Financial covenants are waived for the fiscal quarters ending June 30, 2020, and September 30, 2020 (the "Waiver Period").
- EBITDA Calculation: Calculations of Consolidated EBITDA for the quarter ended December 31, 2019, may now include non-cash expenses for inventory write-downs incurred during that quarter.
- Restricted Payments: Incurrence ratios for restricted payments, investments, and dispositions are held at pre-amendment levels.
Guidance, Outlook, and Risks
Management commentary is limited to the terms of the amendment. The filing indicates that the company is seeking additional flexibility in its leverage levels following the Waiver Period. The increase in interest and fees is tied to the date of the amendment and will continue until the company receives cumulative net cash proceeds of at least $50.0 million from permitted equity or convertible subordinated debt issuances.
Key Facts for Investor Verification
- Verify the company's current liquidity position against the new $30.0 million minimum requirement.
- Monitor the timeline for the waiver of financial covenants (ending September 30, 2020).
- Track the company's progress toward raising $50.0 million in equity or convertible debt to revert interest rates to pre-amendment levels.
- Review the full text of Amendment No. 3 (Exhibit 10.1) for complete details on leverage ratio adjustments post-waiver.