KAR Auction Services,Inc. (NYSE:KAR) Files An 8-K Entry into a Material Definitive Agreement

KAR Auction Services,Inc. (NYSE:KAR) Files An 8-K Entry into a Material Definitive Agreement

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Item1.01

Entry into a Material Definitive
Agreement.

Indenture

On May31, 2017 (the Closing Date), KAR Auction Services,Inc. (the
Company) issued $950 million aggregate principal amount of 5.125%
Senior Notes due 2025 (the Notes). The Notes were issued to an
indenture, dated as of the Closing Date (the Indenture), among
the Company, the guarantors from time to time party thereto (the
Guarantors) and U.S. Bank National Association, as trustee (the
Trustee).

The Company will pay interest on the Notes in cash on June1 and
December1 of each year at a rate of 5.125% per annum. Interest on
the Notes will accrue from and including the Closing Date and the
first interest payment date will be December1, 2017. The Notes
will mature on June1, 2025.

A portion of the proceeds from the issuance of the Notes was used
by the Company to repay a portion of the existing Tranche B-2
Term Loans and Tranche B-3 Term Loans (each as defined below) and
all of the existing revolving loans, in each case outstanding
under the Credit Agreement (as defined below) immediately prior
to the effectiveness of the Second Amendment (as defined below)
(the Repayment), and the remainder of such proceeds will be used
for general corporate purposes.

The Notes are fully and unconditionally guaranteed by each of the
Companys existing and future wholly-owned domestic restricted
subsidiaries that also guarantee the indebtedness of the Company
under the Credit Agreement. Under certain circumstances, the
Indenture permits the Company to designate certain of its
subsidiaries as unrestricted subsidiaries, which subsidiaries
will not be subject to the covenants in the Indenture and will
not guarantee the Notes.

The Notes are the general unsecured senior obligations of the
Company and each guarantee is the general unsecured senior
obligation of each Guarantor. The Notes and the related
guarantees rank equal in right of payment with all of the
Companys and the Guarantors existing and future senior
indebtedness, including borrowings under the Credit Agreement,
and senior in right of payment to all of the Companys and the
Guarantors future subordinated indebtedness. The Notes are
structurally subordinated in right of payment to all existing and
future indebtedness and other liabilities of the Companys
subsidiaries that are not Guarantors and effectively junior in
right of payment to all of the Companys and the Guarantors
existing and future secured indebtedness to the extent of the
value of the collateral securing such indebtedness, including
indebtedness under the Credit Agreement.

At any time and from time to time prior to June1, 2020, the
Company may, at its option, redeem the Notes in whole or in part,
at a redemption price equal to 50% of the principal amount of the
Notes to be redeemed, plus a make-whole premium and accrued and
unpaid interest to, but excluding, the date of redemption.
Thereafter, the Company may, at its option, redeem the Notes in
whole or in part at the prices set forth in the Indenture. In
addition, at any time and from time to time prior to June1, 2020,
the Company may, at its option, redeem up to 40% of the original
aggregate principal amount of the Notes issued under the
Indenture with the proceeds of certain equity offerings.

In the event of a Change of Control Repurchase Event (as defined
in the Indenture), each holder of the Notes will have the right
to require the Company to repurchase all or any part of that
holders Notes at 101% of their principal amount, plus accrued and
unpaid interest to, but excluding, the repurchase date. If the
Company sells assets outside the ordinary course of business and
does not use the net proceeds for specified purposes, it may be
required to use such net proceeds to make an offer to repurchase
the Notes at 50% of their principal amount, plus accrued and
unpaid interest to, but excluding, the date of repurchase.

The Indenture contains covenants that, among other things,
restrict the Companys and its restricted subsidiaries ability
to pay dividends on or make other distributions in respect of
equity interests or make other restricted payments, make
certain investments, incur or guarantee additional
indebtedness, create liens on certain assets to secure debt,
sell certain assets, consummate certain mergers or
consolidations or sell all or substantially all assets, or
designate subsidiaries as unrestricted.

The Indenture also provides for customary events of default,
including non-payment of principal, interest or premium,
failure to comply with covenants, and certain bankruptcy or
insolvency events.

Second Amendment to the Credit
Agreement

On the Closing Date, the Company alsoentered into an
Incremental Commitment Agreement and Second Amendment (the
Second Amendment) to the Amended and Restated Credit Agreement,
dated as of March11, 2014 (as amended by that certain
Incremental Commitment Agreement and First Amendment, dated
March9, 2016 and as further amended by the Second Amendment,
the Credit Agreement), with JPMorgan Chase Bank, N.A., as
administrative agent, the Guarantors and the several lenders
party thereto.

The Second Amendment provides for, among other things, (i)the
refinancing and repricing of the existing tranche B-2 term
loans (the Tranche B-2 Term Loans) remaining after the
Repayment with new tranche B-4 term loans in an aggregate
principal amount of $717 million (the Tranche B-4 Term Loans),
(ii)the refinancing and repricing of the existing tranche B-3
term loans (the Tranche B-3 Term Loans) remaining after the
Repayment with new tranche B-5 term loans in an aggregate
principal amount of $1.05 billion (the Tranche B-5 Term Loans)
and (iii)$350 million of available revolving commitments, which
replaces the previously existing revolving commitments under
the Credit Agreement. The Tranche B-4 Term Loans have the same
maturity as the Tranche B-2 Term Loans, and the Tranche B-5
Term Loans have the same maturity as the Tranche B-3 Term
Loans.

As set forth in the Credit Agreement, the Tranche B-4 Term
Loans and the Tranche B-5 Term Loans will bear an interest at
an amount equal to a rate calculated based on the type of
borrowing and, for any Revolving Loans (as defined in the
Credit Agreement), in addition to the type of borrowing, the
interest will also be computed based on the Companys
Consolidated Senior Secured Leverage Ratio (as defined in the
Credit Agreement). For example, with respect to the Tranche B-4
Term Loans the Company may elect to pay interest based on
either an adjusted LIBOR rate plus 2.25% or Base Rate (as
defined in the Credit Agreement) plus 1.25%. With respect to
the Tranche B-5 Term Loans, the Company may elect to pay
interest based on either an adjusted LIBOR rate plus 2.50% or
Base Rate plus 1.50%. For any Revolving Loans, if the Companys
Consolidated Senior Secured Leverage Ratio is greater than or
equal to 2.75:1.00, then the Company may elect to pay interest
based on either an adjusted LIBOR rate plus 2.25% or Base Rate
plus 1.25%; if the Companys Consolidated Senior Secured
Leverage Ratio is less than 2.75:1.00, then the Company may
elect to pay interest based on either an adjusted LIBOR rate
plus 2.00% or Base Rate plus 1.00%. The Company will also pay a
commitment fee of between 30 to 35 basis points, payable
quarterly, on the average daily unused amount of the Revolving
Facility (as defined in the Credit Agreement) based on the
Companys Consolidated Senior Secured Leverage Ratio, from time
to time.

The descriptions set forth above are intended to be summaries
only, are not complete and are qualified in their entirety by
reference to the full and complete terms contained in the
Indenture (including the form of the Notes attached thereto)
and the Second Amendment, copies of which are filed with this
Current Report on Form8-K as Exhibits 4.1 and 10.1,
respectively, and are incorporated herein by reference.

Affiliates of the initial purchasers of the Notes may be agents
and/or lenders under the Credit Agreement and therefore may
receive proceeds from the offering of the Notes used to repay a
portion of the outstanding borrowings under the Credit
Agreement. In addition, certain of the Initial Purchasers and
their respective affiliates (including affiliates that are
agents and/or lenders under the Credit Agreement) have, from
time to time, performed, and may in the future perform, various
financial advisory, investment banking or other services for
us, for which they received or will receive customary fees and
expenses.

Item2.03

Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The information set forth in Item 1.01 of this Current Report
on Form8-K is incorporated by reference into this Item 2.03, as
appropriate.

Item9.01

Financial Statements and Exhibits.

(d)Exhibits.

4.1

Indenture, dated as of May31, 2017, among KAR Auction
Services,Inc., the guarantors party thereto and U.S. Bank
National Association, as trustee

4.2

Form of 5.125% Note due 2025 (included in Exhibit 4.1)

10.1

Incremental Commitment Agreement and Second Amendment,
dated as of May31, 2017 among KAR Auction Services,Inc.,
JPMorgan Chase Bank, N.A., as administrative agent, the
guarantors party thereto and the several lenders party
thereto


About KAR Auction Services, Inc. (NYSE:KAR)

KAR Auction Services, Inc. is a provider of whole car auction services in North America, and salvage auction services in North America and the United Kingdom. The Company operates through three segments: ADESA, Inc. (ADESA Auctions or ADESA), Insurance Auto Auctions, Inc. (IAA) and Automotive Finance Corporation (AFC). The ADESA segment is a provider of whole car auctions and related services to the vehicle remarketing industry in North America. It serves its customer base through online auctions and auction facilities that are developed and located to draw professional sellers and buyers together, and allow the buyers to inspect and compare vehicles remotely or in person. As a provider of salvage vehicle auctions and related services, it operates as IAA in the United States and Impact Auto Auctions in Canada, and serves customer base through salvage auction locations throughout North America. The AFC segment provides floorplan financing to independent used vehicle dealers.

KAR Auction Services, Inc. (NYSE:KAR) Recent Trading Information

KAR Auction Services, Inc. (NYSE:KAR) closed its last trading session down -0.08 at 43.57 with 523,364 shares trading hands.

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