Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
As previously disclosed,
Heidrick & Struggles International, Inc. (the Company) and certain of its foreign subsidiaries are party to a Credit Agreement, dated as of October 26, 2018 (the Credit Agreement), with Bank of America, N.A., as
administrative agent, SunTrust Bank, as syndication agent, HSBC Bank USA, National Association, as documentation agent, and the other lenders party thereto. The Credit Agreement provides the Company with a senior unsecured revolving line of credit
with an aggregate commitment of $175.0 million, which includes a sublimit of $25.0 million for letters of credit, and a $10.0 million swing-line loan sublimit.
On March 20, 2020, the Company drew down $100.0 million of the $175.0 million available under the revolving credit facility
and, as of March 24, 2020, a total of $100.0 million was outstanding under the revolving credit facility. Borrowings under the revolving credit facility are scheduled to mature on October 26, 2023, and the Company may repay amounts
borrowed any time without penalty.
Borrowings under the Credit Agreement bear interest at the Companys election at the Alternate
Base Rate (as defined in the Credit Agreement) or Adjusted LIBOR (as defined in the Credit Agreement) plus a spread as determined by the leverage ratio. The borrowings outstanding under the revolving credit facility currently bear interest at a rate
of 1.77% per annum.
The Company elected to draw-down a portion of the available funds from its revolving credit facility as a
precautionary measure to increase its cash position and further enhance its financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 outbreak. The Company
believes that it has more than sufficient liquidity even prior to taking this action, but elected to draw down available funds out of an abundance of caution in this period of uncertainty. The draw-down proceeds from the revolving credit facility
are currently being held on the Companys balance sheet and may be used for working capital, capital expenditures, Permitted Acquisitions (as defined in the Credit Agreement) and for other general purposes.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements. The forward-looking statements are
based on current expectations, estimates, forecasts and projections about the industry in which the Company operates and managements beliefs and assumptions. Forward-looking statements may be identified by the use of words such as
expects, anticipates, intends, plans, believes, seeks, estimates, projects, forecasts, and similar expressions. Forward-looking statements
are not guarantees of future performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in the
forward-looking statements. Factors that may affect the outcome of the forward-looking statements include, among other things, leadership changes, the Companys ability to attract, integrate, develop, manage and retain qualified consultants and
senior leaders; the Companys ability to prevent its consultants from taking the Companys clients with them to another firm; the Companys ability to maintain its professional reputation and brand name; the fact that the
Companys net revenue may be affected by adverse economic conditions, including as a result of slowdowns, recessions, economic instability, political unrest, armed conflicts, natural disasters or outbreaks of disease, such as the existing
threat of novel coronavirus COVID-19; the Companys clients ability to restrict the Company from recruiting their employees; the aggressive competition the Company faces; the Companys heavy
reliance on information management systems; the fact that the Company faces the risk of liability in the services it performs; the fact that data security, data privacy and data protection laws and other evolving regulations and cross-border data
transfer restrictions may limit the use of the Companys services and adversely affect its business; social, political, regulatory and legal risks in markets where the Company operates; the impact of foreign currency exchange rate fluctuations;
the fact that the Company may not be able to align its cost structure with net revenue; unfavorable tax law changes and tax authority rulings; the Companys ability to realize its tax losses; the timing of the establishment or reversal of
valuation allowance on deferred tax assets; any impairment of the Companys goodwill, other intangible assets and other long-lived assets; the Companys ability to execute and integrate future acquisitions; the fact that the Company has
anti-takeover provisions that make an acquisition of the Company difficult and expensive; the Companys ability to access additional credit; and the increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and
targeted cyber-related attacks that could pose a risk to the Companys systems, networks, solutions, services and data. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. For more information on the factors that could affect the outcome of forward-looking statements, refer to the Companys Annual Report on Form 10-K, under Risk
Factors in Item 1A and its quarterly filings with the SEC. The Company cautions the reader that the list of factors may not be exhaustive.