MSG NETWORKS INC. (NYSE:MSGN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Amended and Restated Senior Secured Credit Agreement
On October 11, 2019 (the “Effective Date”), MSGN Holdings, L.P. (“MSGN Holdings”), an indirect wholly-owned subsidiary of MSG Networks Inc. (“MSG Networks”), MSGN Eden, LLC, an indirect subsidiary of MSG Networks and the general partner of MSGN Holdings (“MSGN Eden”), Regional MSGN Holdings LLC, a direct subsidiary of MSG Networks and the limited partner of MSGN Holdings (collectively with MSGN Eden, the “Holdings Entities”), and certain subsidiaries of MSGN Holdings entered into an amended and restated credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto. The Credit Agreement amends and restates MSGN Holdings’ prior credit agreement, dated September 28, 2015 (the “Existing Credit Agreement”), in its entirety.
The Facility
The Credit Agreement provides MSGN Holdings with senior secured credit facilities (the “Facilities”) consisting of: (a) a $1.10 billion term loan facility (the “Term Loan Facility”) and (b) a $250 million revolving credit facility (the “Revolving Credit Facility”). Under the Credit Agreement, the maturity date of the Facilities was extended to October 11, 2024. On the Effective Date, proceeds from the Term Loan Facility were used by MSGN Holdings to repay outstanding indebtedness under the Existing Credit Agreement (the “Refinancing”). Proceeds from the Revolving Credit Facility, which was undrawn on the Effective Date, will be used by MSGN Holdings to fund working capital needs and for other general corporate purposes.
Up to $35 million of the Revolving Credit Facility is available for the issuance of letters of credit. All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties.
Interest Rates and Fees
Borrowings under the Credit Agreement bear interest at a floating rate, which at the option of MSGN Holdings may be either (a) a base rate plus an additional margin rate ranging from 0.25% to 1.25% per annum (determined based on a total net leverage ratio) (the “Base Rate”), or (b) a Eurodollar rate plus an additional margin rate ranging from 1.25% to 2.25% per annum (determined based on a total net leverage ratio) (the “Eurodollar Rate”), provided that for the period following the Effective Date until the delivery of the compliance certificate for the second full fiscal quarter of MSGN Holdings following the Effective Date, the additional margin rate used in calculating the floating rate will be (i) 0.50% per annum for borrowings bearing the Base Rate, and (ii) 1.50% per annum for borrowings bearing the Eurodollar Rate.
The Credit Agreement requires MSGN Holdings to pay a commitment fee of between 0.225% and 0.30% (determined based on a total net leverage ratio) in respect of the average daily unused commitments under the Revolving Credit Facility. MSGN Holdings will also be required to pay customary letter of credit fees, as well as fronting fees, to banks that issue letters of credit to the Credit Agreement.
Guarantees and Security
All obligations under the Credit Agreement are guaranteed by the Holdings Entities and MSGN Holdings’ existing and future direct and indirect domestic subsidiaries that are not designated as excluded subsidiaries or unrestricted subsidiaries (the “Subsidiary Guarantors”, and together with the Holdings Entities, the “Guarantors”). All obligations under the Credit Agreement, including the guarantees of those obligations, are secured by certain of the assets of MSGN Holdings and each Guarantor (collectively, “Collateral”), including, but not limited to, a pledge of the equity interests in MSGN Holdings held directly by the Holdings Entities and the equity interests in each Subsidiary Guarantor held directly or indirectly by MSGN Holdings.
