Business Context and Reporting Period
This Form 8-K filing by i3 Verticals, Inc. (IIIV) covers events occurring on May 8, 2023, and a report date of May 9, 2023. The filing primarily announces the entry into a new material definitive agreement regarding debt financing and references the release of financial results for the three and six months ended March 31, 2023.
Key Financial Metrics and Debt Structure
The filing details a new Credit Agreement entered into on May 8, 2023, replacing a prior facility with Bank of America. Key terms include:
- Facility Size: $450 million senior secured revolving credit facility (Revolver).
- Administrative Agent: JPMorgan Chase Bank, N.A.
- Interest Rates: Borrowings are at Base Rate or Adjusted Term SOFR plus an applicable margin ranging from 1.00% to 3.00% depending on the leverage ratio.
- Commitment Fees: Ranging from 0.15% to 0.30% on the unutilized portion of the facility.
- Collateral: Secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, Company, and subsidiaries.
- Financial Covenants:
- Consolidated Interest Coverage Ratio: Minimum 3.00 to 1.0.
- Consolidated Total Net Leverage Ratio: Maximum 5.00 to 1.0.
Note: This filing does not provide specific numerical values for revenue, profit, cash flow, or margins for the period ended March 31, 2023. These figures are contained in the referenced press release (Exhibit 99.1) and supplemental presentation (Exhibit 99.2), which are not included in the provided text.
Material Changes
The primary material change is the refinancing of the company's credit facility. The new agreement with JPMorgan Chase replaces the Amended and Restated Credit Agreement dated May 9, 2019, which was administered by Bank of America. The new facility maintains a $450 million commitment but introduces updated pricing tiers and covenants.
Guidance, Outlook, and Risks
Use of Proceeds: Funds from the Revolver may be used for working capital, capital expenditures, permitted acquisitions, and refinancing existing indebtedness.
Expansion Option: The Borrower has the right to seek additional commitments up to the greater of $100 million or 100% of consolidated EBITDA, subject to covenant compliance and lender approval.
Risks and Restrictions: The Credit Agreement imposes customary restrictions on incurring additional debt, liens, mergers, asset dispositions, and restricted payments. Events of default include payment defaults, covenant breaches, cross-defaults, bankruptcy, and changes in control.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific Q1 and H1 2023 revenue, net income, and cash flow figures.
- Verify the current consolidated total net leverage ratio to determine the applicable interest margin and commitment fee.
- Confirm the status of any outstanding indebtedness being refinanced under the new agreement.
- Assess the impact of the new covenants (3.0x interest coverage, 5.0x leverage) on future operational flexibility.