Huron Consulting Group Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Huron Consulting Group Inc. on April 14, 2011. The filing reports the entry into a new material definitive agreement to restructure the Company's senior secured credit facilities.
Key Financial Metrics and Debt Structure
The Company established a new senior secured credit facility with an aggregate principal amount of $350 million, replacing its previous 2006 credit agreement. The filing does not provide current revenue, profit, cash flow, or margin data.
- Total Facility Size: $350 million
- Revolving Credit Facility: $150 million (five-year term, reduced by outstanding letters of credit).
- Term Loan Facility: $200 million (five-year term, funded in a single advance on the closing date).
- Expansion Option: The revolving facility may be increased by up to $50 million subject to specific requirements.
- Interest Rates: Variable based on the Company's total debt to EBITDA ratio, calculated as a spread over LIBOR or the Base Rate.
- Amortization Schedule (Term Loan): 7.5% in Year 1, 10.0% in Year 2, 12.5% in Years 3 and 4, and 57.5% in Year 5.
Material Changes Versus Prior Period
The primary material change is the termination of the Credit Agreement dated June 7, 2006, and all subsequent amendments. This was replaced by the Amended and Restated Credit Agreement dated April 14, 2011. The new agreement increases the total available credit and restructures the repayment terms and covenants.
Guidance, Risks, and Covenants
The filing does not contain forward-looking guidance on revenue or earnings. However, it outlines significant financial covenants and risks associated with the new debt structure:
- Financial Covenants: The Company must maintain specific leverage ratios, fixed charge coverage ratios, and net worth levels.
- Collateral: The agreement grants lenders a first-priority lien on substantially all personal property assets and 100% of the equity interests of domestic subsidiaries (and 65% of certain foreign subsidiaries).
- Acceleration Triggers: Maturity dates may be accelerated upon bankruptcy, insolvency, payment defaults, covenant breaches, or a change in control.
- Restrictions: Certain acquisitions and similar transactions require lender approval.
Key Facts for Investor Verification
- Verify the Company's current leverage ratio to ensure compliance with the new financial covenants.
- Confirm the specific interest rate spreads applicable to the current debt-to-EBITDA ratio.
- Review the use of proceeds to confirm the extent to which existing indebtedness was refinanced versus used for working capital.
- Monitor the quarterly amortization payments on the $200 million term loan starting immediately.
- Check for any outstanding letters of credit that reduce the available capacity of the $150 million revolving facility.