Business Context and Reporting Period
Company: DNOW Inc. (formerly NOW Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: April 30, 2018
Event: Entry into a Material Definitive Agreement regarding a new senior secured credit facility.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, or historical debt levels. It details the terms of a new financing arrangement:
- New Credit Facility: $750 million global revolving credit facility.
- Expansion Option: Potential to increase the facility to $1.0 billion.
- Subfacilities: $60 million letter of credit subfacility and a swing line subfacility equal to 10% of the facility amount.
- Term: Five years.
- Administrative Agent: Wells Fargo Bank, National Association.
- Collateral: Secured by substantially all assets of the Borrowers and guarantors.
- Borrowing Base: Determined by eligible account receivables and eligible inventory.
Material Changes Versus Prior Period
The Company replaced its existing senior secured credit facility with the new facility described above. The filing does not provide comparative financial data or specific metrics regarding the prior facility's size or terms.
Guidance, Outlook, and Risks
Management Commentary: The filing confirms the execution of the new credit agreement to replace the prior facility. No forward-looking guidance on revenue or earnings is provided in this document.
Covenants and Risks:
- The facility contains customary covenants, representations, warranties, and events of default.
- Fixed Charge Coverage Ratio: This covenant applies only if availability under the Credit Facility falls below a certain threshold.
- Interest Rates: Borrowings bear interest at the base rate plus an applicable margin or LIBOR plus an applicable margin, based on the Company's fixed charge coverage ratio and leverage ratio.
Important Facts for Investor Verification
- Verify the specific threshold for availability that triggers the fixed charge coverage ratio covenant.
- Review the full text of the Credit Agreement (Exhibit 10.1) for detailed definitions of "eligible account receivables" and "eligible inventory" that determine the borrowing base.
- Confirm the specific interest rate margins applicable to the Company's current leverage and coverage ratios.
- Check subsequent filings for any utilization of the new $750 million facility or exercise of the expansion option to $1.0 billion.