BRC

Business Context and Reporting Period

Company: Brady Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: June 12, 2026
Context: The filing announces the entry into a new Credit Agreement to finance the pending acquisition of Honeywell International Inc.'s Productivity Solutions and Services business ("PSS").

Key Financial Metrics and Debt Structure

New Credit Facility: $1.0 billion aggregate principal amount.
Components:

• $500 million Term Loan Facility.
• $500 million Revolving Credit Facility.

Revolving Facility Details:

• Initial availability capped at $300 million prior to PSS acquisition closing.
• Expands to full $500 million commitment post-closing.
• Includes $100 million letter of credit sublimit and $100 million swing line sublimit.
• Multi-currency options: USD, EUR, GBP, AUD, JPY, CAD.

Term Loan Details:

• Quarterly amortization of 1.25% of original principal commencing three months post-closing.
• Final maturity date: June 12, 2031.

Interest Rates: Variable based on Base Rate or Term Benchmark (e.g., Term SOFR, EURIBOR) plus a margin tied to the consolidated net leverage ratio.

Material Changes Versus Prior Period

Termination of Prior Agreement: The new Credit Agreement replaced and terminated the previous credit agreement entered into on August 1, 2019.
Debt Exchange: Outstanding revolving loans under the previous agreement totaling €13.0 million were exchanged for revolving loans under the new Credit Agreement. All other obligations under the prior agreement were repaid in full.
Incremental Capacity: The new agreement allows for an increase in revolving commitments or additional term loan tranches up to $550 million, plus unlimited additional amounts subject to leverage ratio compliance.

Guidance, Covenants, and Risks

Financial Covenants:

• Maximum Consolidated Net Leverage Ratio: 3.50 to 1.00 (temporarily increased to 4.00 to 1.00 for four computation periods following the PSS acquisition closing).
• Minimum Consolidated Interest Coverage Ratio: 3.00 to 1.00.

Use of Proceeds: Financing the PSS acquisition, paying transaction costs, funding capital expenditures, working capital, and general corporate purposes.
Risks/Contingencies: The filing notes that the description is qualified by the full text of the Credit Agreement (Exhibit 10.1). Compliance with the leverage ratio is a condition for accessing unlimited incremental borrowing capacity.

Investor Verification Checklist

• Verify the exact closing date of the PSS acquisition to determine when the revolving facility expands to $500 million and when amortization begins.
• Review the full Credit Agreement (Exhibit 10.1) for specific definitions of "Consolidated Net Leverage Ratio" and "Consolidated Interest Coverage Ratio."
• Monitor the company's ability to maintain the temporary 4.00 to 1.00 leverage ratio cap post-acquisition.
• Confirm the impact of the €13.0 million debt exchange on the company's currency exposure and interest rate profile.
• Assess the total transaction costs associated with the PSS acquisition and the new credit facility.