Business Context and Reporting Period
Company: PRA Group, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: May 5, 2017
Event: Entry into a Material Definitive Agreement (Amended and Restated Credit Facility).
Key Financial Metrics
This filing details the restructuring of the company's debt facilities rather than reporting operational performance metrics such as revenue or profit.
- Total Credit Facility: $1,205,000,000 (Five-year secured amended and restated credit facility).
- Term Loan Facility: $450,000,000.
- Domestic Revolving Loan Facility: Up to $705,000,000.
- Canadian Revolving Loan Facility: Up to $50,000,000.
- Expansion Option: The Company may increase commitments by an additional $45,000,000 subject to terms.
- Interest Rates:
- Alternate Base Rate + 1.50% OR Eurodollar Rate + 2.50%.
- Canadian Prime Rate + 1.50%.
- Collateral: Secured by substantially all assets of the Company, Guarantors, and PRA Canada Inc.
Material Changes Versus Prior Period
The new Credit Agreement amends and restates the existing secured credit agreement dated December 19, 2012. This represents a significant refinancing event replacing the prior facility with a larger, five-year structure.
Guidance, Outlook, Risks, and Covenants
Covenants and Restrictions: The agreement includes customary financial covenants, including:
- Maximum consolidated total leverage ratio.
- Maximum consolidated senior secured leverage ratio.
- Income from operations and capital expenditures covenants.
- Limitations on liens, incurrence of debt, investments, mergers, asset dispositions, and restricted payments.
Risks: An event of default (including non-payment, breach of representations, insolvency, or cross-defaults) could result in all loans becoming immediately due and payable and the termination of the facility.
Availability Calculation: Revolving facility availability is based on a borrowing base calculation comprising percentages of estimated remaining collections of eligible asset pools (35%), insolvency eligible asset pools (55%), and eligible accounts (75%).
Important Facts for Investor Verification
- Verify the specific leverage ratios and financial covenant thresholds in the full Credit Agreement to be filed in the Form 10-Q for the quarter ended June 30, 2017.
- Confirm the impact of the new borrowing base calculation on immediate liquidity availability.
- Review the press release (Exhibit 99.1) for management's strategic rationale regarding the refinancing.
- Note that the filing does not provide current revenue, profit, or cash flow figures; these must be sourced from the most recent 10-Q or 10-K.