Item 1.01 Entry into a Material Definitive Agreement.
On May 1, 2020, Square, Inc. (the "Company") replaced its existing revolving
credit agreement (the "Existing Credit Agreement") by entering into a Revolving
Credit Agreement, dated as of May 1, 2020, among the Company, the lenders party
thereto, and Goldman Sachs Bank USA, as administrative agent (the "Credit
The Credit Agreement provides for a senior unsecured revolving credit facility
of up to $500.0 million that matures three years after the effective date, with
the right (subject to certain conditions, including the agreement of the
Lenders) to add an incremental revolving credit facility of up to the greater of
(x) $413.0 million and (y) 100% of the Company's consolidated adjusted EBITDA
for the most recently ended period of four fiscal quarters, plus (b) the
aggregate amount of any permanent optional reductions of commitments, plus
(c) an unlimited amount after giving effect to the incurrence of any such
incremental facility pursuant to the Credit Agreement, so long as the Company's
total net leverage ratio for the most recently ended period of four fiscal
quarters does not exceed 2.5:1.00 on a pro forma basis. The three-year revolving
credit facility provides for borrowings up to the amount of the facility with a
sublimit of up to $50.0 million to be available for the issuance of letters of
credit. At closing, no amounts were drawn under the revolving credit facility
and there were no outstanding letters of credit under the revolving credit
Under the Credit Agreement, loans bear interest, at the Company's option, at an
annual rate based on LIBOR or a base rate. Loans based on LIBOR shall bear
interest at a rate between LIBOR plus 1.25% and LIBOR plus 1.75%, depending on
the Company's total net leverage ratio. Loans based on the base rate shall bear
interest at a rate based on the highest of the prime rate, the federal funds
rate plus 0.50%, and the adjusted LIBOR rate plus 1.00%, in each case, plus a
margin ranging from 0.25% to 0.75%, depending on the Company's total net
leverage ratio. The Company is required to pay a commitment fee equal to 0.15%
per annum on the undrawn portion available under the revolving credit facility.
The Credit Agreement contains customary affirmative and negative covenants and
restrictions typical for a financing of this type that, among other things,
restrict the Company and its restricted subsidiaries' ability to incur
additional indebtedness, create liens, merge or consolidate or make certain
dispositions, pay dividends and make distributions, enter into restrictive
agreements, enter into agreements with affiliates, and make certain investments
and acquisitions. The Credit Agreement also contains a financial covenant that
requires the Company to maintain a minimum liquidity amount of at least
$250.0 million, tested on a quarterly basis. The Credit Agreement contains
customary events of default relating to, among other things, payment defaults,
breach of covenants, cross default to material indebtedness, bankruptcy-related
defaults, judgment defaults, and the occurrence of certain change of control
events. Non-compliance with one or more of the covenants and restrictions or the
occurrence of an event of default could result in the full or partial principal
balance of the Credit Agreement becoming immediately due and payable and
termination of the commitments.
Item 1.02 Termination of a Material Definitive Agreement.
In connection with entering into the Credit Agreement, the Company terminated
the Existing Credit Agreement. The Existing Credit Agreement provided for a
five-year $375.0 million senior unsecured revolving credit facility, which the
Company entered into on November 2, 2015 with the lenders party thereto and
JPMorgan Chase Bank, N.A, as administrative agent. The Existing Credit Agreement
contained customary events of default and covenants, including, a limit on the
Company's and its subsidiaries' ability to incur additional indebtedness, create
liens, merger or consolidate or make certain dispositions, pay dividends or make
distributions, enter into restrictive agreements, and enter into agreements with
affiliates. As of the closing date of the Credit Agreement and the termination
of the Existing Credit Agreement, there were no outstanding loans and no letters
of credit outstanding.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
10.1 Revolving Credit Agreement, dated as of May 1, 2020, by and among
Square, Inc., as borrower, the lenders party thereto, and Goldman
Sachs Bank USA, as administrative agent.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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