Business Context and Reporting Period
This Form 8-K Current Report was filed by The Trade Desk, Inc. on June 15, 2021. The filing discloses the entry into a new material definitive agreement and the termination of a prior credit facility.
Key Financial Metrics and Debt Structure
The filing details a new revolving credit facility with the following terms:
- Total Facility Size: $450.0 million.
- Sublimits: $20.0 million for swingline borrowings and $15.0 million for letters of credit.
- Expansion Option: The Company may increase the facility by up to $300.0 million under certain circumstances.
- Maturity Date: June 15, 2026.
- Interest Rates: Variable rates based on Base Rate or adjusted LIBOR plus an applicable margin (0.25% to 1.25% for Base Rate; 1.25% to 2.25% for LIBOR).
- Undrawn Fees: Ranges from 0.200% to 0.350% based on leverage.
- Collateral: Substantially all Company assets, including accounts receivable, deposit accounts, intellectual property, investment property, and equipment.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes Versus Prior Period
On June 15, 2021, the Company terminated its Second Amended and Restated Loan and Security Agreement dated October 26, 2018. Key differences include:
- Capacity Increase: The new facility ($450.0 million) is three times larger than the terminated facility ($150.0 million).
- Term Extension: The new facility matures in 2026, extending the maturity date by approximately four years compared to the terminated facility's 2022 maturity.
- Expansion Rights: The new agreement allows for a potential $300.0 million increase, compared to a $100.0 million increase under the prior agreement.
- Agent Change: The administrative agent changed from Citibank, N.A. to JPMorgan Chase Bank, N.A.
Guidance, Risks, and Covenants
The new Loan and Security Agreement imposes several restrictive covenants and financial requirements:
- Financial Covenant: The Company must maintain a maximum ratio of consolidated funded debt to consolidated EBITDA of 3.50 to 1.00.
- Operational Restrictions: Covenants restrict the ability to sell assets, change the nature of the business, engage in mergers or acquisitions, incur additional indebtedness, create liens, pay dividends, issue equity, or repurchase capital stock without meeting specific conditions.
- Risks: Failure to comply with covenants or events of default could result in the acceleration of debt obligations.
The filing contains no forward-looking guidance regarding revenue or earnings.
Investor Verification Checklist
- Verify the current outstanding balance under the new $450.0 million facility to assess immediate leverage.
- Confirm the Company's current consolidated funded debt to EBITDA ratio to ensure compliance with the 3.50 to 1.00 covenant.
- Review the full text of the Loan and Security Agreement (Exhibit 10.1) for specific definitions of "consolidated funded debt" and "EBITDA."
- Monitor future filings for any utilization of the $300.0 million expansion option.