CBRE GROUP, INC. (NYSE:CBG) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
On October31, 2017, the Company, CBRE Services, Inc., a subsidiary of the Company (“Services” or the “U.S. Borrower”), certain subsidiaries of Services, the lenders party thereto, and Credit Suisse AG (“Credit Suisse”), as administrative agent, entered into a Credit Agreement (the “Credit Agreement”), which replaced that certain Second Amended and Restated Credit Agreement, dated as of January9, 2015 (as amended prior to the date hereof, the “Existing Credit Agreement”), among the Company, Services, certain subsidiaries of Services, the lenders party thereto and Credit Suisse, as administrative agent.
The Credit Agreement provides for the following credit facilities, the proceeds of which were used to repay in full the loans outstanding and replace in full the commitments available, as applicable, under the Existing Credit Agreement:
|•||a $750million senior unsecured delayed draw tranche A term loan facility (which was initially drawn on October31, 2017 in an amount of $200million and which may be drawn on one additional occasion on any date prior to July31, 2018 in an amount up to the remaining principal amount of commitments available under the tranche A term loan facility on such date); and|
|•||a senior unsecured revolving credit facility of up to $2.8billion, including an allowance for borrowings outside of the United States, with (i)a $200million sub-facility allowing for multicurrency revolving borrowings available to the U.S. Borrower (Services), the Canadian Borrower (CBRE Limited), the Australian Borrower (CBRE Pty Limited) and the New Zealand Borrower (CBRE Limited) and (ii)a $300million sub-facility allowing for U.K. revolving loans to the U.S. Borrower and the U.K. Borrower (CBRE Limited).|
The revolving credit facility includes borrowing capacity (i)of up to $200million for letters of credit and (ii)up to $50million for short-term borrowings (referred to as swingline loans) available to the New Zealand Borrower.
On October31, 2017, the U.S. Borrower made initial borrowings of (i) $200million under the tranche A term loan facility (with the remaining $550million available to be drawn under the tranche A term loan facility on one additional occasion on any date on or prior to July31, 2018) and (ii) $83 million under the revolving credit facility. These proceeds, in addition to cash on hand, were used to repay all amounts outstanding under the Existing Credit Agreement.
Interest Rate and Fees
Borrowings under the Credit Agreement bear interest at a rate equal to an applicable rate plus, at the applicable borrowers’ option, either (1)a base rate determined by reference to the greatest of (a)the prime rate determined by Credit Suisse, (b)the federal funds rate plus 1/2 of 1% and (c)the sum of (i)a reserve adjusted LIBO rate determined by reference to the ICE Benchmark Administration Interest Settlement Rates for deposits in dollars, Pounds or Euro, as applicable, for an interest period of one month plus (ii)1.00% or (2)a reserve adjusted LIBO rate determined by reference to the ICE Benchmark Administration Interest Settlement Rates for deposits in dollars, Pounds or Euro, as applicable, for the applicable interest period.
The applicable rate for borrowings with respect to the tranche A term loan facility and revolving credit facility are based on the Company’s credit ratings in accordance with the table below.
|³ A-||³ A3||0.100||%||0.875||%||0.0||%||0.775||%||0.0||%||0.100||%|
In addition to paying interest on outstanding principal under the tranche A term loan facility and the revolving credit facility, the U.S. Borrower is required to pay (1)a facility fee to the lenders under the revolving credit facility (whether drawn or undrawn) and (2)a ticking fee to the lenders under the tranche A term loan facility (commencing on January30, 2018 and ending on July31, 2018 (or such earlier date as the tranche A term loan facility is terminated or drawn in its entirety)) based on the amount of undrawn commitments available thereunder from time to time, which facility fee and ticking fee are each based on the Company’s credit ratings in accordance with the table above. The applicable borrowers must also pay customary letter of credit fees.
The Credit Agreement does not require the borrowers to prepay outstanding loans under the revolving credit facilities or tranche A term loan facility, except on any date on which the sum of all outstanding revolving credit loans, all outstanding swingline loans and the total of all lenders’ letter of credit exposure exceeds 105% of the total revolving credit commitments under the Credit Agreement, in which case the borrowers must pay 50% of such excess amount.
The borrowers may voluntarily repay outstanding loans under the tranche A term loan facility and the revolving credit facility at any time without premium or penalty (other than as described in the following sentence). All prepayments of term and revolving loans shall be subject to certain customary “breakage” costs with respect to Fixed Rate loans. In addition, the borrowers may elect to permanently terminate or reduce all or a portion of the delayed draw term commitments or the revolving credit commitments and the letter of credit sub-limit under the revolving credit facility at any time, in each case, without premium or penalty.
Amortization and Maturity
The U.S. Borrower is required to repay installments on the tranche A term loans in quarterly principal amounts of 0.25% of the aggregate principal amount thereunder on March5, May15, August15 and November15 of each year, with the balance payable on October31, 2022. In the event that the consolidated leverage ratio of the Company and its subsidiaries is less than or equal to 2.50 to 1.00 on the last day of the fiscal quarter immediately preceding any such installment payment date, no such installment payment shall be required on such date.
The entire principal amount of revolving credit loans and swingline loans outstanding (if any) under the revolving credit facility are due and payable in full at maturity on October31, 2022, on which day the revolving credit and swingline commitments thereunder will terminate.
All obligations under the Credit Agreement are unconditionally guaranteed by the Company and each of its direct and indirect U.S. material subsidiaries which guarantee any other material indebtedness of the Company and its subsidiaries. The obligations of the foreign subsidiaries under the Credit Agreement are unconditionally guaranteed by the U.K. Borrower, the Canadian Borrower, CBRE Global Holdings S.A.R.L., Relam Amsterdam Holdings B.V. and CBRE Limited Partnership.
Covenants and Events of Default
The Credit Agreement includes financial covenants requiring the Company and its subsidiaries to maintain a maximum leverage ratio and minimum interest coverage ratio. In addition, the Credit Agreement also contains other customary affirmative and negative covenants and events of default.
The descriptions of the Credit Agreement and guarantees above are summaries and are qualified in their entirety by the Credit Agreement and Guarantee Agreement, filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K, which are incorporated herein by reference.
Item 1.01 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 hereby incorporated by reference into this Item 1.01.
Item 1.01 Financial Statements and Exhibits
|10.1||Credit Agreement, dated as of October 31, 2017, among CBRE Group, Inc., CBRE Services, Inc., certain subsidiaries of CBRE Services, Inc., the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent.|
|10.2||Guarantee Agreement, dated as of October 31, 2017, among CBRE Group, Inc., CBRE Services, Inc., the subsidiary guarantors party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent.|
CBRE GROUP, INC. ExhibitEX-10.1 2 d485157dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 EXECUTION VERSION DDTL CUSIP: 12508LAB1 DRCF CUSIP: 12508LAC9 MCRCF CUSIP: 12508LAD7 UKRCF CUSIP: 12508LAE5 CREDIT AGREEMENT dated as of October 31,…To view the full exhibit click
About CBRE GROUP, INC. (NYSE:CBG)
CBRE Group, Inc. is a holding company that conducts all of its operations through its subsidiaries. The Company is a commercial real estate services and investment company. The Company operates through the segments: The Americas; Europe, Middle East and Africa (EMEA); Asia Pacific; Global Investment Management, and Development Services. It offers commercial real estate services under the CBRE brand name, investment management services under the CBRE Global Investors brand name and development services under the Trammell Crow Company brand name. Its software as a service (SaaS) products include Protofit and Luma. Protofit allows users to visualize and edit floor plans in two dimension (2D) and three dimension (3D) (including external window views from each floor) and to create customized space layouts in real-time. Luma enables an interactive customized 3D walk-through experience for new, unbuilt and repositioned spaces.