DSGR

Business Context and Reporting Period

Company: Distribution Solutions Group, Inc. (DSGR)
Filing Type: Form 8-K (Current Report)
Date of Report: December 18, 2025
Event: Entry into a Material Definitive Agreement (Second Amended and Restated Credit Agreement).

Key Financial Metrics and Debt Structure

This filing details a refinancing of the company's debt facilities rather than operational financial results. Key terms include:

• Revolving Credit Facility: $400 million (includes $25 million letter of credit subfacility and $10 million swingline loan subfacility).
• Term Loan Facility: $700 million senior secured initial term loan.
• Expansion Option: Ability to increase commitments by up to $500 million subject to lender approval and covenant compliance.
• Debt Repayment: Proceeds from the new term loan will repay $709 million outstanding under the Original Credit Agreement.
• Maturity Date: December 18, 2030.
• Interest Rates:
  • Base Rate/Prime: Margin of 0.00% to 1.75% (Initial margin: 1.50%).
  • SOFR: Margin of 1.00% to 2.75% (Initial margin: 2.50%).
• Commitment Fee: 0.15% to 0.35% on unused revolving amounts (Initial rate: 0.30%).
• Principal Repayment: Quarterly payments of $8,750,000 on the term loan.

Material Changes Versus Prior Period

The company replaced its April 1, 2022, credit agreement with a new facility. While the total term loan amount ($700 million) is slightly lower than the outstanding balance of the previous agreement ($709 million), the new structure provides a larger revolving facility ($400 million) and an option to expand total commitments by $500 million. The maturity date has been extended to 2030.

Guidance, Covenants, and Risks

Financial Covenants:

• Minimum Interest Coverage Ratio: 2.75
• Maximum Total Net Leverage Ratio: 4.25

Restrictive Covenants: The agreement restricts asset dispositions, additional indebtedness, dividends, mergers, and changes in lines of business. Events of Default: Include nonpayment, covenant breaches, cross-defaults, bankruptcy, and change of control. A default interest rate of 2.00% above the applicable rate applies upon default. Security: Obligations are secured by a first priority lien on substantially all assets of the Company and its subsidiaries.

Investor Verification Checklist

• Verify the company's current Total Net Leverage Ratio to ensure compliance with the 4.25 maximum covenant.
• Confirm the company's current Interest Coverage Ratio to ensure compliance with the 2.75 minimum covenant.
• Review the specific terms of the "permitted acquisitions" allowed under the revolving facility.
• Monitor the quarterly principal repayment schedule ($8.75 million) against projected cash flows.
• Check for any subsequent filings regarding the utilization of the $500 million accordion expansion feature.