Business Context and Reporting Period
Company: Take-Two Interactive Software, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 17, 2011
Event: Entry into a Material Definitive Agreement and Creation of a Direct Financial Obligation.
Key Financial Metrics and Debt Structure
This filing details the restructuring of the Company's credit facilities rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
- Revolving Credit Facility: $100,000,000 aggregate principal amount.
- Accordion Feature: Capacity to increase the facility by up to $40,000,000, for a maximum total of $140,000,000.
- Letters of Credit Subfacility: $25,000,000.
- U.K. Subfacility: Up to $25,000,000 (subject to borrowing base).
- Interest Margins:
- Base Rate: 1.50% to 2.00% above base rate.
- LIBOR Rate: 2.50% to 3.00% above LIBOR.
- Collateral: Secured by liens on substantially all assets of domestic subsidiaries and pledges of equity interests in domestic and first-tier foreign subsidiaries.
Material Changes Versus Prior Period
The Company entered into a Second Amended and Restated Credit Agreement on October 17, 2011, replacing the existing agreement dated November 16, 2007.
- Extension: The maturity of the revolving credit facility has been extended to October 17, 2016.
- Structure: The new agreement maintains the $100 million principal but introduces specific borrowing base calculations for U.S. and U.K. operations and formalizes the accordion feature for potential expansion.
Guidance, Outlook, and Covenants
The filing does not provide operational guidance or outlook. However, it outlines significant financial covenants and restrictions imposed by the new Credit Agreement:
- Liquidity Requirements: Interest margins are subject to the achievement of certain levels of a 30-day average liquidity amount.
- Restrictions: Limitations on incurring additional indebtedness, disposing of assets, making acquisitions, creating liens, making investments, and paying dividends.
- Convertible Notes: The agreement includes an exception permitting the redemption of the Company's unsecured convertible notes upon meeting certain minimum liquidity requirements.
- Events of Default: Includes nonpayment, breach of covenants, insolvency, and default on other material contracts. Upon default, obligations become immediately due.
Important Facts for Investor Verification
- Verify the Company's current liquidity position to ensure compliance with the 30-day average liquidity requirements affecting interest rates.
- Confirm the status of the Company's unsecured convertible notes and whether the new liquidity thresholds allow for their redemption.
- Review the specific borrowing base calculations (85% of eligible accounts and inventory limits) to understand the actual available borrowing capacity versus the $100 million principal.
- Monitor compliance with the new covenants restricting dividends and asset dispositions.