Business Context and Reporting Period
Reservoir Media, Inc. filed this Form 8-K on December 16, 2022, with the report signed on December 20, 2022. The filing reports a material amendment to the senior secured revolving credit facility of its wholly owned subsidiary, Reservoir Media Management, Inc.
Material Financing Terms
- Revolving credit commitments increased from $350 million to $450 million.
- Accordion capacity for incremental borrowings increased from $50 million to $150 million.
- Maturity was extended to December 16, 2027.
- Interest is based on either the applicable base rate plus a 1.00% margin or SOFR plus a 2.00% margin, with a 0.25% increase subject to the consolidated net senior debt-to-library value ratio.
- The existing total leverage ratio covenant of no greater than 7.50:1.00, net of up to $20 million of certain cash balances, was removed.
- The minimum required fixed charge coverage ratio was reduced to 1.10:1.00.
- The consolidated senior debt-to-library value covenant was modified to 0.450, subject to specified adjustments.
Financial Results and Liquidity
This filing does not provide revenue, profit, cash flow, margin, debt outstanding, or cash balance information. It does indicate increased borrowing capacity and extended debt maturity, but does not state whether the additional capacity was drawn.
Guidance, Outlook, Risks, and Unusual Items
The amendment may improve financing flexibility and reduce certain covenant constraints. The filing does not provide management guidance or operating outlook. Key risks include interest-rate exposure under the base-rate and SOFR pricing options, compliance with the revised fixed charge coverage and senior debt-to-library value covenants, and the possibility that increased borrowing capacity could result in higher leverage.
The filing refers to the agreement as the “Second Amendment” in Item 1.01, while the exhibit description refers to a “First Amendment.” The complete agreement should be reviewed to resolve this apparent labeling inconsistency.
Important Facts to Verify
- Whether any portion of the increased $450 million commitment or $150 million accordion capacity was utilized.
- The company’s outstanding borrowings, available liquidity, and applicable interest rate at the reporting date.
- The definitions, permitted adjustments, and testing requirements for the revised financial covenants.
- The precise terms of the December 16, 2022 amendment, including the apparent First Amendment/Second Amendment discrepancy.
- Any subsequent amendments, borrowings, defaults, covenant compliance issues, or changes in the facility after the filing date.