Item 1.01 Entry into a Material Definitive Agreement.
On
The Company may elect borrowings under the Term Facility to be base rate
borrowings or Eurodollar rate borrowings. Base Rate borrowings by the Company
under the Term Facility bear interest at a base rate, which is the highest of
(a) the rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the
The Company's obligations under the Credit Agreement are guaranteed by substantially all of its existing and future domestic subsidiaries pursuant to the Credit Agreement. The Credit Agreement contains terms and provisions (including representations, covenants and conditions) customary for transactions of this type. Financial covenants include maintenance of a maximum average total leverage ratio (average total funded debt/EBITDA) and a minimum fixed charge coverage ratio (EBITDAR/cash interest expense plus rental expense). On the last day of each fiscal quarter, our maximum average total leverage ratio must be less than 3.25 to 1.00 and our minimum fixed charge coverage ratio must be greater than or equal to 2.25 to 1.00. The Term Facility limits the declaration and payment of dividends on our common stock to no more than 50% of the preceding year's Net Income (as defined in the Credit Agreement), provided no default or event of default has occurred and is continuing or would result therefrom and the dividends are declared and paid in a manner consistent with our past practice. The Company may repurchase shares of its common stock provided no default or event of default has occurred and is continuing or would result therefrom and our maximum average total leverage ratio (determined on a pro forma basis) is less than 2.50 to 1.00. Other covenants include restrictions on the ability of the Company to grant liens, incur indebtedness, make investments, merge or consolidate, and sell or transfer assets. Failure to comply with any of our financial covenants or any other terms of our Term Facility could result in penalty payments, higher interest rates on our borrowings or the acceleration of the maturities of our outstanding debt.
In the ordinary course of business, the Company and its affiliates have engaged, and may in the future engage, certain parties to the Credit Agreement or the affiliates of such parties to provide commercial banking, investment banking, and other services for which the Company or its affiliates pay customary fees and commissions.
The description of the Term Facility set forth above is qualified by reference to the Credit Agreement, which is filed as Exhibit 10.1 to this Form 8-K.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 above is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 Credit Agreement, datedDecember 30, 2019 , amongPool Corporation , as Borrower, certain of its subsidiaries, as Guarantors, andBank of America, N.A ., as Lender. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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