Business Context and Reporting Period
This Form 8-K Current Report was filed by Rent-A-Center, Inc. (noted as UPBOUND GROUP, INC. in metadata) on December 2, 2009. The filing discloses the entry into a First Amendment to the Company's Third Amended and Restated Credit Agreement, dated May 28, 2003, as previously amended.
Key Financial Metrics and Debt Structure
The Amended Credit Agreement establishes a total senior credit facility of $999 million, structured as follows:
- Tranche A Term Facility: $165 million (fully funded), split into two equal sub-tranches of $82.5 million each.
- Tranche B Term Facility: $484 million (fully funded), split into sub-tranches of approximately $184 million and $300 million.
- Revolving Facility: $350 million.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes Versus Prior Period
The First Amendment introduces significant changes to the maturity dates and repayment schedules of the existing debt:
- Extension of Maturities:
- Existing Tranche A Term Loans mature June 30, 2011; Extended Tranche A Term Loans mature September 30, 2013.
- Existing Tranche B Term Loans mature June 30, 2012; Extended Tranche B Term Loans mature March 31, 2015.
- Revolving Facility maturity extended from July 13, 2011, to September 30, 2013.
- Repayment Schedules: New installment schedules were established for all tranches, with varying quarterly payments ranging from $0.6 million to $71.6 million depending on the tranche and period.
- Debt Capacity: The general additional debt permitted to be incurred by the Company and subsidiaries increased from $150 million to $300 million. A new limitation caps subsidiary indebtedness at $50 million outstanding at any one time.
- Interest Rates: Borrowings accrue interest based on ABR or Eurodollar rates plus an Applicable Margin. Margins vary by tranche and loan type (e.g., 0.75% to 3.0% depending on the specific loan category).
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future performance, or specific risk factors beyond the standard financial covenants. Key contractual terms include:
- Financial Covenants: The Company must satisfy certain financial covenants, which generally remain the same as the Existing Credit Agreement.
- Expansion Option: The Company may increase the Tranche A Extended, Tranche B Extended, and/or Revolving Loans up to three times, in an aggregate amount of up to $150 million, provided no default exists and lender consent is obtained.
- Fees: A commitment fee of 0.5% to 0.625% of the average daily available revolving commitment is payable quarterly.
Important Facts for Investor Verification
- Verify the Company's current consolidated leverage ratio to determine the applicable interest rate margin under the pricing grid.
- Confirm compliance with the new $50 million cap on aggregate indebtedness incurred by subsidiaries.
- Review the specific quarterly repayment obligations starting December 31, 2009, to assess near-term cash flow requirements.
- Check for any existing defaults that would preclude the exercise of the $150 million expansion option.