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| EX-10.1 - SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Ubiquiti Inc. | ex10-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 17,
2018
UBIQUITI NETWORKS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction of incorporation)
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001-35300
(Commission
File Number)
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32-0097377
(IRS
Employer Identification No.)
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685 Third Avenue, 27th Floor
New York, NY 10017
(Address
of principal executive offices, including zip code)
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(646) 780-7958
(Registrant’s
telephone number, including area code)
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N/A
(Former
name or former address, if changed since last report)
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Check
the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written communications pursuant to
Rule 425 under the Securities Act (17 CFR
230.425)
☐ Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐ Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
☐ Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Emerging
growth company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Item 1.01
Entry
into a Material Definitive Agreement.
The
disclosures set forth in Item 2.03 of this Current Report on Form
8-K are incorporated herein by reference.
Item 1.02
Termination
of a Material Definitive Agreement.
The
disclosures set forth in Item 2.03 of this Current Report on Form
8-K are incorporated herein by reference.
Item 2.03
Creation
of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On
January 17, 2018, Ubiquiti Networks, Inc. (the
“Company”) and Ubiquiti International Holding Company
Limited, a wholly-owned subsidiary of the Company organized under
the laws of the Cayman Islands (the “Cayman Borrower”
and, together with the Company, the “Borrowers”),
entered into an amended and restated credit agreement (the
“Credit Agreement”) with Wells Fargo Bank, National
Association (“Wells Fargo”), the other financial
institutions named as lenders therein, and Wells Fargo as
administrative agent for the lenders, that provides for a $400
million senior secured revolving credit facility and a $500 million
senior secured term loan facility (collectively, the
“Facilities”), with an option to request increases in
the amounts of such credit facilities by up to an additional $300
million in the aggregate (any such increase to be in each
lender’s sole discretion).
The revolving credit facility includes a sub-limit
of $10 million for letters of credit and a sub-limit of $25 million
for swingline loans. The Facilities replace the Company’s
existing $425million senior secured revolving credit facility and
$100 million senior secured
term loan facility (collectively, the “Existing
Facility”) under the credit agreement dated as of March 3,
2015, as amended, among the Borrowers, the lenders party thereto
and Wells Fargo, as administrative agent for the lenders, which has
been terminated in connection with the new Facilities. The
Facilities are available for working capital and general corporate
purposes that comply with the terms of the Credit Agreement,
including to finance the repurchase of the Company's common stock
or to make dividends to the holders of the Company's common stock.
Under the Credit Agreement, revolving loans and swingline loans may
be borrowed, repaid and reborrowed until January 17, 2023, at which
time all amounts borrowed must be repaid. The term loan facility
was drawn in full at closing, with a portion thereof used to
refinance the Existing Facility, and matures on January 17, 2023.
The term loan is payable in quarterly installments of 1.25% of the
original principal amount of the term loan until December 31, 2019,
thereafter increasing to 1.875% until December 31, 2020, and
thereafter increasing to 2.5% of the original principal amount of
the term loan. Revolving, swingline and term loans may be prepaid
at any time without penalty. Revolving and term loans bear
interest, at the Company’s option, at either (i) a floating
rate per annum equal to the base rate plus a margin of between
0.50% and 1.25%, depending on the Company’s consolidated
total leverage ratio as of the most recently ended fiscal quarter
or (ii) a floating per annum rate equal to the applicable LIBOR
rate (or replacement rate) for a specified period, plus a margin of
between 1.50% and 2.25%, depending on the Company’s
consolidated total leverage ratio as of the most recently ended
fiscal quarter. Swingline loans bear interest at a floating rate
per annum equal to the base rate plus a margin of between 0.50% and
1.25%, depending on the Company’s consolidated total leverage
ratio as of the most recently ended fiscal quarter. Base rate is
defined as the greatest of (A) Wells Fargo’s prime rate, (B)
the federal funds rate plus 0.50% or (C) the applicable LIBOR rate
(or replacement rate) for a period of one month plus 1.00%. A
default interest rate shall apply on all obligations during certain
events of default under the Credit Agreement at a rate per annum
equal to 2.00% above the applicable interest rate. The Company will
pay to each lender a facility fee on a quarterly basis based on the
unused amount of each lender’s commitment to make revolving
loans, of between 0.20% and 0.35%, depending on the Company’s
consolidated total leverage ratio as of the most recently ended
fiscal quarter. The Company will also pay to the applicable lenders
on a quarterly basis certain fees based on the daily amount
available to be drawn under each outstanding letter of credit,
including aggregate letter of credit commissions of between 1.50%
and 2.25%, depending on the Company’s consolidated total
leverage ratio as of the most recently ended fiscal quarter, and
issuance fees of 0.125% per annum. The Company is also obligated to
pay Wells Fargo, as agent, fees customary for a credit facility of
this size and type.
The
Credit Agreement requires the Company to maintain during the term
of the Facilities (i) a maximum consolidated total leverage ratio
of 3.25 to 1.00 and (ii) minimum liquidity of $250 million, which
can be satisfied with unrestricted cash and cash equivalents and up
to $50 million of availability under the revolving credit facility.
In addition, the Credit Agreement contains customary affirmative
and negative covenants, including covenants that limit or restrict
the ability of the Company and its subsidiaries to, among other
things, grant liens or enter into agreements restricting their
ability to grant liens on property, enter into mergers, dispose of
assets, change their accounting or reporting policies, change their
business and incur indebtedness, in each case subject to customary
exceptions for a credit facility of this size and type. The Credit
Agreement includes customary events of default that include, among
other things, non-payment of principal, interest or fees,
inaccuracy of representations and warranties, violation of
covenants, cross default to certain other indebtedness, bankruptcy
and insolvency events, material judgments, change of control and
certain ERISA events. The occurrence of an event of default could
result in the acceleration of the obligations under the Credit
Agreement.
The
obligations of the Company and certain domestic subsidiaries under
the Credit Agreement are required to be guaranteed by such domestic
subsidiaries (the “Domestic Guarantors”) and are
collateralized by substantially all assets (excluding intellectual
property) of the Company and the Domestic Guarantors. The
obligations of the Cayman Borrower and certain foreign subsidiaries
under the Credit Agreement are required to be guaranteed by certain
domestic and material foreign subsidiaries (the
“Guarantors”) and are collateralized by substantially
all assets (excluding intellectual property) of the Company and the
Guarantors.
Wells
Fargo and the lenders and other financial institutions party to the
Credit Agreement, and certain of their respective affiliates, have
provided, and in the future may provide, financial, banking and
related services to the Company. These parties have received, and
in the future may receive, compensation from the Company for these
services.
The
foregoing is a summary description of certain terms of the Credit
Agreement and does not purport to be complete, and it is qualified
in its entirety by reference to the full text of the Credit
Agreement, which is attached as Exhibit 10.1 to this Current Report
on Form 8-K and incorporated herein by reference.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No.
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Description
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Second
Amended and Restated Credit Agreement, dated as of January 17,
2018, by and among Ubiquiti Networks, Inc. and Ubiquiti
International Holding Company Limited, as borrowers, certain
subsidiaries of the borrowers, as guarantors, the lenders and other
financial institutions party thereto and Wells Fargo Bank, National
Association, as administrative agent.
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
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Date:
January 23, 2018
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Ubiquiti Networks,
Inc.
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By:
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/s/ Robert
J. Pera
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Name:
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Robert
J. Pera
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Title:
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Chief
Executive Officer
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