Business Context and Reporting Period
This Form 8-K is a current report filed by Dex Media, Inc. (f/k/a Dex One Corporation) on March 3, 2015. The filing addresses a proposed amendment to the Company's existing Credit Agreement, originally entered into in connection with the 2013 merger between Dex One Corporation and SuperMedia Inc.
Key Financial Metrics and Debt Provisions
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, or margins. Instead, it details specific debt-related provisions within the proposed Credit Agreement Amendment:
- EBITDA Definition Change: The definition of "Consolidated EBITDA" is being amended to allow for the add-back of cash costs associated with restructurings (including severance, IT systems, and lease terminations). The allowable cap is increased from $3.5 million to $15 million for fiscal year 2015 and $5 million for fiscal year 2016.
- Debt Repurchase: The Borrower (Dex Media West, Inc.) is authorized to repurchase and retire debt below or at par using cash up to a maximum of $6.5 million within 60 days of the Amendment's effective date.
- Amendment Fees: Lenders consenting to the amendment will receive a fee equal to 1.50% of the aggregate principal amount of their loans, plus reimbursement of reasonable out-of-pocket expenses.
Material Changes Versus Prior Period
The primary material change is the relaxation of financial covenants regarding restructuring costs. Previously, only severance costs up to $3.5 million per year could be added back to EBITDA. The proposed amendment expands this to include broader restructuring costs (IT, leases) and significantly increases the cap for 2015 to $15 million. Additionally, the filing introduces a new provision allowing for a specific debt buyback of up to $6.5 million.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future operations, or a discussion of general business risks. The primary contingency noted is the requirement for lender consent. Lenders must consent to the proposed Amendment by 5:00 p.m. New York City time on Friday, March 6, 2015, for the changes to become effective.
Key Facts for Investor Verification
- Verify if the required lender consent (more than half of the Lenders) was obtained by the March 6, 2015 deadline.
- Confirm the actual amount of debt repurchased under the $6.5 million authorization.
- Review the full text of the First Amendment to the Credit Agreement (Exhibit 10.1) for any other covenants or conditions not summarized in this report.
- Monitor future filings to see how the increased EBITDA add-backs for restructuring costs impact the Company's reported leverage ratios.