Business Context and Reporting Period
Company: Energizer Holdings, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 22, 2020
Event: Entry into a Material Definitive Agreement involving the amendment and restatement of the Company's Credit Agreement.
Key Financial Metrics and Debt Structure
This filing details the restructuring of the Company's debt facilities rather than reporting operational financial performance metrics such as revenue or profit.
| Facility Type | Principal Amount | Maturity | Amortization |
|---|---|---|---|
| Revolving Credit Facility | $400,000,000 | 5 years (from Dec 22, 2020) | None required |
| Term Loans | $550,000,000 | 7 years (from Dec 22, 2020) | 0.25% quarterly of original principal |
Interest Rates:
- Revolving: LIBOR + 1.50% to 2.75% (based on leverage) or Base Rate + margin (1.00% lower than LIBOR margin).
- Term Loans: LIBOR + 2.25% or Base Rate + 1.25%.
Covenants:
- Maximum Senior Secured Net Leverage Ratio: 3.25 to 1.00.
- Minimum Consolidated Interest Coverage Ratio: 2.50 to 1.00.
Material Changes Versus Prior Period
- Debt Restructuring: The new agreement replaced the Existing Credit Agreement dated December 17, 2018. Proceeds were used to repay all existing revolving and term loans in full.
- Covenant Modification: The previous maximum total net leverage ratio covenant was replaced with a maximum senior secured net leverage ratio (3.25:1) and a minimum interest coverage ratio (2.50:1).
- Incremental Capacity: The Company may increase facilities by minimums of $50 million, subject to leverage limits (generally 3.00:1 senior secured leverage).
- Redemption Funding: The agreement permits borrowing up to $650,000,000 in term loans specifically to redeem 7.750% Senior Notes due 2027.
Guidance, Outlook, and Risks
Management Commentary and Outlook:
The Revolving Credit Facility is designated for ongoing working capital requirements and general corporate purposes. The Company has issued a conditional notice of redemption for its 7.750% Senior Notes due 2027, with an expected redemption date of January 8, 2021, utilizing the new term loan capacity.
Risks and Contingencies:
- Collateral: Obligations are secured by a first priority perfected lien on substantially all assets of the Company and Guarantors.
- Leverage Constraints: Future borrowing for acquisitions or incremental facilities is strictly capped by senior secured leverage ratios (3.00:1) and total net leverage ratios (6.00:1 for unsecured debt).
Important Facts for Investor Verification
- Verify the execution of the redemption of the 7.750% Senior Notes due 2027 on or around January 8, 2021.
- Confirm the utilization of the $650 million term loan capacity specifically for the note redemption.
- Monitor the Company's compliance with the new 3.25:1 senior secured net leverage ratio and 2.50:1 interest coverage ratio covenants.
- Review the impact of the new interest rate floors (0.00% for LIBOR revolving, 0.50% for LIBOR term loans) on future interest expense.