Business Context and Reporting Period
This Form 8-K filing by i3 Verticals, Inc. (IIIV) reports on events occurring on May 9, 2019, with the report filed on May 13, 2019. The company is an emerging growth company incorporated in Delaware, with its Class A Common Stock trading on the Nasdaq Global Select Market. The filing primarily addresses the entry into a material definitive credit agreement and references operational results for the three and six months ended March 31, 2019.
Key Financial Metrics and Debt Structure
The filing details a new Amended and Restated Credit Agreement establishing a senior secured revolving credit facility (Revolver) with aggregate commitments of $300 million. The company retains the option to seek additional commitments up to $50 million for term loans or revolving credit, subject to specific leverage and interest coverage ratios.
- Facility Size: $300 million Revolver.
- Additional Capacity: Up to $50 million contingent on maintaining a consolidated interest coverage ratio of at least 3.00 to 1.0 and adhering to senior leverage ratio schedules.
- Interest Rates: Borrowings are at Base Rate or Eurodollar (LIBOR) plus an applicable margin ranging from 0.25% to 3.25%, depending on the consolidated total leverage ratio.
- Fees: Commitment fees range from 0.15% to 0.30% on the unutilized portion of the facility.
- Collateral: Obligations are secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, the Company, and subsidiary guarantors.
The filing text does not provide specific values for revenue, net profit, cash flow, or current liquidity positions, as these are contained in the referenced press release (Exhibit 99.1) and supplemental presentation (Exhibit 99.2) rather than the body of this 8-K.
Material Changes and Covenants
The primary material change is the amendment and restatement of the company's credit agreement, replacing the October 30, 2017 agreement. The new agreement imposes specific financial covenants regarding leverage ratios:
- Senior Leverage Ratio Limits:
- 2019 (Q2-Q4): 3.75 to 1.0
- 2020: 3.75 to 1.0
- 2021 (Q1-Q2): 3.75 to 1.0; (Q3-Q4): 3.50 to 1.0
- Thereafter: 3.50 to 1.0
- Operational Restrictions: The agreement restricts the ability to incur additional debt and liens, merge, consolidate, liquidate, dispose of assets, make restricted payments, or enter into sale-leaseback transactions without meeting specific conditions.
Guidance, Outlook, and Risks
The filing incorporates by reference a press release and supplemental presentation regarding results for the three and six months ended March 31, 2019, but does not contain explicit forward-looking guidance or management commentary within the text of this report. Proceeds from the Revolver are designated for working capital, capital expenditures, permitted acquisitions, and refinancing existing indebtedness.
Risks and Contingencies: The agreement includes customary events of default, including payment defaults, breaches of representations, covenant defaults, cross-defaults to other material indebtedness, bankruptcy, and changes in control. The company is required to prepay any amounts exceeding the $300 million Revolver limit.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) and Exhibit 99.2 (Supplemental Presentation) for specific revenue, profit, and cash flow figures for the period ended March 31, 2019.
- Verify the current utilization rate of the $300 million Revolver to assess immediate liquidity.
- Confirm the company's current consolidated total leverage ratio to determine the applicable interest rate margin and commitment fee.
- Examine the full text of the Amended and Restated Credit Agreement (Exhibit 10.1) for detailed definitions of "permitted acquisitions" and specific covenant calculation methodologies.
- Monitor compliance with the senior leverage ratio schedule, particularly the step-down to 3.50 to 1.0 effective September 30, 2021.