On June 18, 2020 (the “Closing Date”), Leidos Holdings, Inc., a Delaware corporation (“Leidos”), Leidos, Inc., a Delaware corporation and a wholly-owned subsidiary of Leidos, as borrower (the “Borrower”), and certain other wholly-owned domestic subsidiaries of Leidos, as guarantors (collectively, the “Subsidiary Guarantors” and, together with Leidos and the Borrower, collectively, the “Loan Parties”), entered into a 364-Day Term Loan Credit Agreement (the “Credit Agreement”), with the lenders party thereto and Mizuho Bank, Ltd., as administrative agent. The Credit Agreement provides for a senior unsecured term loan facility in an aggregate principal amount of $300,000,000 (the “Credit Facility”). The Credit Facility will mature 364 days from the Closing Date.

Leidos and the Borrower used the proceeds of the Credit Facility and cash on hand on the Closing Date to (i) repay in full all indebtedness under, and discharge and release all guarantees existing in connection with, that certain Term Loan Credit Agreement, dated as of February 12, 2020, among Leidos, the Borrower, Citibank, N.A., as administrative agent, and the lenders, other agents and other parties party thereto from time to time (as amended by that certain First Amendment, dated as of May 5, 2020, and as further amended, amended and restated, supplemented or otherwise modified prior to the Closing Date) (the “Terminated Credit Agreement”) and (ii) pay certain fees, costs and expenses related to the refinancing of the Terminated Credit Agreement. Leidos and the Subsidiary Guarantors guarantee the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest at a rate determined, at our option, based on either an alternate base rate, with an applicable margin that may range from 75 bps to 125 bps, or a LIBOR rate plus, with an applicable margin that may range from 175 bps to 225 bps, in each case depending on the credit rating of the Borrower. Based on our current ratings, the applicable margin for LIBOR-denominated borrowings is 200 bps.

The Credit Agreement contains certain customary representations and warranties, as well as certain customary affirmative and negative covenants. The Credit Agreement’s negative covenants restrict the activities of the Loan Parties and Leidos’ other subsidiaries, including, among other things, such Loan Party’s or subsidiary’s ability to (i) create certain liens on its assets, (ii) dispose of substantially all of its assets, (iii) merge, liquidate, dissolve, change its business or consolidate with other entities, (iv) effect sale-and-leaseback transactions and (v) enter affiliate transactions. The Credit Agreement also restricts the ability of Leidos’ subsidiaries that are not Loan Parties to incur debt and issue preferred stock.

The financial covenants in the Credit Agreement require that the Borrower maintain, as of the last day of each fiscal quarter (beginning with the second fiscal quarter of 2020), (1) a ratio of adjusted consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) of not more than 4.50 to 1.00 and (2) a ratio of EBITDA to consolidated interest expense of not less than 3.50 to 1.00.

The Credit Agreement also contains certain customary events of default, including, among others, defaults based on certain bankruptcy and insolvency events, nonpayment, cross-defaults to other debt, breach of specified covenants, ERISA events, material monetary judgments, change of control events, inability to pay debts as they become due, actual or asserted invalidity of guarantees and the material inaccuracy of our representations and warranties.

The foregoing description does not purport to be complete and is subject to and is qualified in its entirety by reference to all of the provisions of the Credit Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Item 1.02. Termination of a Material Definitive Agreement.

On the Closing Date, the Borrower repaid in full all indebtedness under, and discharged and released all guarantees existing in connection with, the Terminated Credit Agreement.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangements or Registrant.

The descriptions of the financing arrangements in Item 1.01 of this Current Report are incorporated into this Item 2.03 by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits: The following exhibits are attached with this report:

Leidos Holdings, Inc. Exhibit
EX-10.1 2 leidos364-dayloanxcreditag.htm EXHIBIT 10.1 Exhibit EXECUTION VERSION364-DAY TERM LOAN CREDIT AGREEMENT dated as of June 18,…
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