Business Context and Reporting Period
This Form 8-K Current Report was filed by Artisan Partners Asset Management Inc. on August 16, 2022. The filing details significant capital structure transactions executed by Artisan Partners Holdings LP ("Holdings"), the parent entity of which the Company is the sole general partner.
Key Financial Metrics and Debt Structure
The filing focuses on debt refinancing and credit facility amendments rather than operational performance metrics. Key financial terms include:
- New Debt Issuance: $90 million of 3.10% Series F Senior Notes issued via private placement.
- Debt Repayment: Proceeds used to repay $90 million of 4.98% Series C Senior Notes maturing on the filing date.
- Credit Facility: A $100 million revolving credit facility was amended and extended for an additional five-year period.
- Outstanding Borrowings: As of the filing date, there were no outstanding borrowings under the amended revolving credit agreement.
- Financial Covenants:
- Leverage Ratio: Must not exceed 3.00 to 1.00.
- Interest Coverage Ratio: Must not be less than 4.00 to 1.00 over any four consecutive fiscal quarters.
Material Changes Versus Prior Period
The primary material change is the refinancing of senior debt, which reduces the interest rate burden on the $90 million tranche from 4.98% to 3.10%. Additionally, the maturity profile of the revolving credit facility has been extended by five years. The filing does not provide comparative operational data (e.g., revenue or AUM) for the prior period.
Guidance, Risks, and Contingencies
The filing outlines specific contingencies and risks associated with the new debt instruments:
- Prepayment Trigger: Holdings is generally required to offer to pre-pay the Series F Notes if Artisan's average Assets Under Management (AUM) for a fiscal quarter falls below $45 billion.
- Change in Control: A Change in Control triggers a requirement to offer prepayment of the notes.
- Events of Default: The agreements include customary events of default, upon which the notes become due and payable.
- Guarantees: Artisan Partners Limited Partnership, a wholly-owned subsidiary, has guaranteed Holdings' obligations under both the Note Purchase Agreement and the Revolving Credit Agreement.
Investor Verification Checklist
- Verify the current Assets Under Management (AUM) to assess proximity to the $45 billion prepayment trigger threshold.
- Review the full text of the Note Purchase Agreement (Exhibit 10.1 from the December 7, 2021 filing) for detailed covenant definitions.
- Confirm the current leverage ratio and interest coverage ratio to ensure compliance with the 3.00:1.00 and 4.00:1.00 covenants.
- Monitor the interest rate environment, as the revolving credit facility rates are tied to Term SOFR and applicable margins.