Spark Energy, Inc. (NASDAQ:SPKE) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
Senior Credit Facility
On May 19, 2017, Spark Energy, Inc. (the Company) as guarantor,
and Spark Holdco, LLC (Spark Holdco, and together with certain
subsidiaries of Spark Holdco, LLC, the Co-Borrowers) entered into
a $120.0 million senior secured revolving credit facility (the
Senior Credit Facility), subject to a borrowing base, and
contains with the facility, a $72.0 million sublimit for letters
of credit with a term greater than 90 days and up to 365 days, a
$30.0 million Bridge Loan sublimit to be used exclusively for
financing up to 75% of the cost of acquisition transactions and a
$85.0 million sublimit for working capital advances and general
corporate purposes (including financing up to 75% of the cost of
acquisition transactions in excess of the Bridge Loan sublimit),
as such sublimits may be adjusted as provided therein. Subject to
customary conditions, the Co-Borrowers may request that the
lenders aggregate commitments under the Senior Credit Facility be
increased by up to $30.0 million (but the lenders are not
required to agree to increase their respective commitments). The
Senior Credit Facility replaces the Amended and Restated Credit
Agreement, dated July 8, 2015, by and among the Company, as
parent, Spark Holdco and the other co-borrowers party thereto,
Socit Gnrale, as administrative agent, and the other lenders
party thereto.
and Spark Holdco, LLC (Spark Holdco, and together with certain
subsidiaries of Spark Holdco, LLC, the Co-Borrowers) entered into
a $120.0 million senior secured revolving credit facility (the
Senior Credit Facility), subject to a borrowing base, and
contains with the facility, a $72.0 million sublimit for letters
of credit with a term greater than 90 days and up to 365 days, a
$30.0 million Bridge Loan sublimit to be used exclusively for
financing up to 75% of the cost of acquisition transactions and a
$85.0 million sublimit for working capital advances and general
corporate purposes (including financing up to 75% of the cost of
acquisition transactions in excess of the Bridge Loan sublimit),
as such sublimits may be adjusted as provided therein. Subject to
customary conditions, the Co-Borrowers may request that the
lenders aggregate commitments under the Senior Credit Facility be
increased by up to $30.0 million (but the lenders are not
required to agree to increase their respective commitments). The
Senior Credit Facility replaces the Amended and Restated Credit
Agreement, dated July 8, 2015, by and among the Company, as
parent, Spark Holdco and the other co-borrowers party thereto,
Socit Gnrale, as administrative agent, and the other lenders
party thereto.
The Senior Credit Facility will mature on May 19, 2019; provided
that borrowings under the Bridge Loan sublimit will be repaid 25%
per year with the remainder due at maturity.
that borrowings under the Bridge Loan sublimit will be repaid 25%
per year with the remainder due at maturity.
At the applicable Co-Borrowers election, interest will be
generally determined by reference to:
generally determined by reference to:
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Eurodollar rate plus an applicable margin of up to 3.0% per
annum (based upon the prevailing utilization); or |
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the alternate base rate plus an applicable margin of up to
2.0% per annum (based upon the prevailing utilization). The alternate base rate is equal to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.5% per annum, or (iii) the reference Eurodollar rate plus 1.0%. |
The interest rate is generally reduced by 25 basis points if
utilization is below fifty percent. Notwithstanding the
foregoing, interest with respect to borrowings under the Bridge
Loans will be generally determined by reference to:
utilization is below fifty percent. Notwithstanding the
foregoing, interest with respect to borrowings under the Bridge
Loans will be generally determined by reference to:
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the Eurodollar rate plus an applicable margin of up to
3.75% per annum (based upon the prevailing utilization); or |
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the alternate base rate plus an applicable margin of up to
2.75% per annum (based upon the prevailing utilization). The alternate base rate is equal to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.5% per annum, or (iii) the reference Eurodollar rate plus 1.0%. |
With respect to Eurodollar rate loans requested with same day
notice, Coperatieve Rabobank U.A., New York Branch, as
administrative agent (Agent), may charge a liquidity premium in
addition to the applicable margin set forth above, determined in
Agents sole discretion on the first day of each interest period
therefor.
notice, Coperatieve Rabobank U.A., New York Branch, as
administrative agent (Agent), may charge a liquidity premium in
addition to the applicable margin set forth above, determined in
Agents sole discretion on the first day of each interest period
therefor.
The Co-Borrowers will pay an annual commitment fee of 0.5% on the
unused portion of the commitments under the Senior Credit
Facility. The lending syndicate under the Senior Credit Facility
is entitled to several additional fees including an upfront fee,
annual agency fee, and fronting fees based on a percentage of the
face amount of letters of credit payable to any syndicate member
that issues a letter a credit.
unused portion of the commitments under the Senior Credit
Facility. The lending syndicate under the Senior Credit Facility
is entitled to several additional fees including an upfront fee,
annual agency fee, and fronting fees based on a percentage of the
face amount of letters of credit payable to any syndicate member
that issues a letter a credit.
Availability under the Senior Credit Facility is subject to
borrowing base limitations. The borrowing base is calculated
primarily based on 80-90% of the value of eligible accounts
receivable and unbilled product sales (depending on the credit
quality of the counterparties) and inventory and other working
capital assets. The Co-Borrowers must generally seek approval of
Agent, or the lenders for the financing of permitted
acquisitions.
borrowing base limitations. The borrowing base is calculated
primarily based on 80-90% of the value of eligible accounts
receivable and unbilled product sales (depending on the credit
quality of the counterparties) and inventory and other working
capital assets. The Co-Borrowers must generally seek approval of
Agent, or the lenders for the financing of permitted
acquisitions.
The Senior Credit Facility will be secured by pledges of the
equity of the portion of Spark Holdco owned by the Company and
of the equity of Spark Holdcos subsidiaries and the
Co-Borrowers present and future subsidiaries, substantially all
of the Co-Borrowers and their subsidiaries present and future
property and assets, including accounts receivable, inventory
and liquid investments, and control agreements relating to bank
accounts.
equity of the portion of Spark Holdco owned by the Company and
of the equity of Spark Holdcos subsidiaries and the
Co-Borrowers present and future subsidiaries, substantially all
of the Co-Borrowers and their subsidiaries present and future
property and assets, including accounts receivable, inventory
and liquid investments, and control agreements relating to bank
accounts.
The Senior Credit Facility also contains covenants that, among
other things, will require the maintenance of specified ratios
or conditions as follows:
other things, will require the maintenance of specified ratios
or conditions as follows:
Minimum Fixed Charge Coverage Ratio. The Company must maintain
a minimum fixed charge coverage ratio of 1.25 to 1. The Fixed
Charge Coverage Ratio is defined as the ratio of (a) Adjusted
EBITDA to (b) the sum of consolidated (with respect to the
Company and the Co-Borrowers) interest expense (other than
interest paid-in-kind in respect of any Subordinated Debt but
including interest in respect of that certain promissory note
made by Censtar Energy Corp in connection with the permitted
acquisition from Verde Energy USA Holdings, LLC), letter of
credit fees, commitment fees, earnout payments (including
certain earnout payments with respect to the permitted
acquisitions from Verde Energy USA Holdings, LLC and National
Gas Electric, LLC, but in each case, excluding earnout payments
funded with proceeds from newly issued preferred or common
equity of the Company), certain cash installment payments in
connection with the permitted acquisition from National Gas
Electric, LLC, repurchases of the Class A common stock of the
Company or commitments for such repurchases, distributions and
scheduled amortization payments.
a minimum fixed charge coverage ratio of 1.25 to 1. The Fixed
Charge Coverage Ratio is defined as the ratio of (a) Adjusted
EBITDA to (b) the sum of consolidated (with respect to the
Company and the Co-Borrowers) interest expense (other than
interest paid-in-kind in respect of any Subordinated Debt but
including interest in respect of that certain promissory note
made by Censtar Energy Corp in connection with the permitted
acquisition from Verde Energy USA Holdings, LLC), letter of
credit fees, commitment fees, earnout payments (including
certain earnout payments with respect to the permitted
acquisitions from Verde Energy USA Holdings, LLC and National
Gas Electric, LLC, but in each case, excluding earnout payments
funded with proceeds from newly issued preferred or common
equity of the Company), certain cash installment payments in
connection with the permitted acquisition from National Gas
Electric, LLC, repurchases of the Class A common stock of the
Company or commitments for such repurchases, distributions and
scheduled amortization payments.
Maximum Total Leverage Ratio. The Company must maintain a ratio
of total indebtedness (excluding the qualifying subordinated
debt) to Adjusted EBITDA of a maximum of 2.00 to 1.
of total indebtedness (excluding the qualifying subordinated
debt) to Adjusted EBITDA of a maximum of 2.00 to 1.
The Senior Credit Facility contains various negative covenants
that limit the Companys ability to, among other things, do any
of the following:
that limit the Companys ability to, among other things, do any
of the following:
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incur certain additional indebtedness;
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grant certain liens;
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engage in certain asset dispositions;
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merge or consolidate;
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make certain payments, distributions, investments,
acquisitions or loans; |
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materially modify certain agreements;
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enter into transactions with affiliates.
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The Company and Spark Holdco will be entitled to pay cash
dividends to the holders of their respective equity interests
and the Company will be entitled to repurchase up to an
aggregate amount of 5,000,000 shares of the Companys Class A
common stock through one or more normal course open market
purchases through the NASDAQ National Market so long as: (a) no
default exists or would result therefrom; (b) the Co-Borrowers
are in pro forma compliance with all financial covenants before
and after giving effect thereto; and (c) the outstanding amount
of all loans and letters of credit does not exceed the
borrowing base limits. Spark HoldCos inability to satisfy
certain financial covenants or the existence of an event of
default, if not cured or waived, under the Senior Credit
Facility could prevent the Company from paying dividends to
holders of the Companys equity interests.
dividends to the holders of their respective equity interests
and the Company will be entitled to repurchase up to an
aggregate amount of 5,000,000 shares of the Companys Class A
common stock through one or more normal course open market
purchases through the NASDAQ National Market so long as: (a) no
default exists or would result therefrom; (b) the Co-Borrowers
are in pro forma compliance with all financial covenants before
and after giving effect thereto; and (c) the outstanding amount
of all loans and letters of credit does not exceed the
borrowing base limits. Spark HoldCos inability to satisfy
certain financial covenants or the existence of an event of
default, if not cured or waived, under the Senior Credit
Facility could prevent the Company from paying dividends to
holders of the Companys equity interests.
The Senior Credit Facility contains certain customary
representations and warranties and events of default. Events of
default include, among other things, payment defaults, breaches
of representations and warranties, covenant defaults,
cross-defaults and cross-acceleration to certain indebtedness,
change in control in which affiliates of W. Keith Maxwell III
own less than 6,800,000 of the Class A common shares and Class
B common shares of the Company (calculated on a combined basis
and adjusted as more particularly provided therein), failure of
Nathan Kroeker to retain his position as President and Chief
Executive Officer of the Company, failure of W. Keith Maxwell
III to retain his position as chairman of the board of
directors
representations and warranties and events of default. Events of
default include, among other things, payment defaults, breaches
of representations and warranties, covenant defaults,
cross-defaults and cross-acceleration to certain indebtedness,
change in control in which affiliates of W. Keith Maxwell III
own less than 6,800,000 of the Class A common shares and Class
B common shares of the Company (calculated on a combined basis
and adjusted as more particularly provided therein), failure of
Nathan Kroeker to retain his position as President and Chief
Executive Officer of the Company, failure of W. Keith Maxwell
III to retain his position as chairman of the board of
directors
of the Company (the Board), certain events of bankruptcy,
certain events under ERISA, material judgments in excess of
$5.0 million, certain events with respect to material
contracts, actual or asserted failure of any guaranty or
security document supporting the Senior Credit Facility to be
in full force and effect and changes of control. If such an
event of default occurs, the lenders under the Senior Credit
Facility would be entitled to take various actions, including
the acceleration of amounts due under the facility and all
actions permitted to be taken by a secured creditor.
certain events under ERISA, material judgments in excess of
$5.0 million, certain events with respect to material
contracts, actual or asserted failure of any guaranty or
security document supporting the Senior Credit Facility to be
in full force and effect and changes of control. If such an
event of default occurs, the lenders under the Senior Credit
Facility would be entitled to take various actions, including
the acceleration of amounts due under the facility and all
actions permitted to be taken by a secured creditor.
A copy of the Senior Credit Facility is attached as Exhibit
10.1 to this Current Report on Form 8-K. The above
description of the material terms of the Senior Credit
Facility does not purport to be complete and is qualified in
its entirety by reference to such exhibit.
10.1 to this Current Report on Form 8-K. The above
description of the material terms of the Senior Credit
Facility does not purport to be complete and is qualified in
its entirety by reference to such exhibit.
Item 1.02. Termination of a Material Definitive Agreement.
The Company previously entered into that certain Amended and
Restated Credit Agreement, dated July 8, 2015, by and among
the Company, as parent, Spark Holdco and the other
co-borrowers party thereto, Socit Gnrale, as administrative
agent, and the other lenders party thereto (the Prior Credit
Agreement), which included a senior secured revolving working
capital facility up to $82.5 million and a secured revolving
line of credit of $25.0 million to be used specifically for
the financing of up to 75% of the cost of acquisitions.
Restated Credit Agreement, dated July 8, 2015, by and among
the Company, as parent, Spark Holdco and the other
co-borrowers party thereto, Socit Gnrale, as administrative
agent, and the other lenders party thereto (the Prior Credit
Agreement), which included a senior secured revolving working
capital facility up to $82.5 million and a secured revolving
line of credit of $25.0 million to be used specifically for
the financing of up to 75% of the cost of acquisitions.
On May 19, 2017, in connection with entering into the Senior
Credit Facility described above in Item 1.01 of this Current
Report on Form 8-K, the Company terminated the Prior Credit
Agreement.
Credit Facility described above in Item 1.01 of this Current
Report on Form 8-K, the Company terminated the Prior Credit
Agreement.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation Under an Off-Balance Sheet Arrangement of the
Registrant
Obligation Under an Off-Balance Sheet Arrangement of the
Registrant
The disclosures under Item 1.01 of this Current Report on
Form 8-K are also responsive to Item 2.03 of this Current
Report on Form 8-K and are incorporated by reference into
this Item 2.03.
Form 8-K are also responsive to Item 2.03 of this Current
Report on Form 8-K and are incorporated by reference into
this Item 2.03.
Item 3.03. Material Modification to Rights of Security
Holders.
Holders.
The disclosure under Item 1.01 of this Current Report on
Form 8-K relating to the Senior Credit Facility and the
restrictions on payment of dividends thereunder is also
responsive to Item 3.03 and is incorporated by reference
into this Item 3.03.
Form 8-K relating to the Senior Credit Facility and the
restrictions on payment of dividends thereunder is also
responsive to Item 3.03 and is incorporated by reference
into this Item 3.03.
Item 7.01. Regulation FD Disclosure.
The information in this Item 7.01, including Exhibit 99.1,
is being furnished and shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities
of Section 18, and shall not be incorporated by reference
in any filing under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, except
as set forth by specific reference in such filing. On May
22, 2017, the Company issued a press release announcing the
closing of the Senior Credit Facility, a copy of which is
attached hereto as Exhibit 99.1 and is incorporated herein
by reference.
is being furnished and shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities
of Section 18, and shall not be incorporated by reference
in any filing under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, except
as set forth by specific reference in such filing. On May
22, 2017, the Company issued a press release announcing the
closing of the Senior Credit Facility, a copy of which is
attached hereto as Exhibit 99.1 and is incorporated herein
by reference.
Item 8.01 Other Events
On May 22, 2017, the Board authorized and approved a
two-for-one stock split of the Companys issued Class A and
Class B Common Stock (collectively, Common Stock), to be
effected in the form of a stock dividend (the Stock Split).
Shareholders of record at the close of business on June 5,
2017 will be issued one additional share of Common Stock of
the Company for each share of Common Stock held by such
shareholders on that date. Such additional shares of Common
Stock are expected to be distributed on or about June 16,
2017. Subsequent to the Stock Split, the Company will have
13,250,454 shares of Class A common stock and 21,485,126
shares of Class B common stock outstanding.
two-for-one stock split of the Companys issued Class A and
Class B Common Stock (collectively, Common Stock), to be
effected in the form of a stock dividend (the Stock Split).
Shareholders of record at the close of business on June 5,
2017 will be issued one additional share of Common Stock of
the Company for each share of Common Stock held by such
shareholders on that date. Such additional shares of Common
Stock are expected to be distributed on or about June 16,
2017. Subsequent to the Stock Split, the Company will have
13,250,454 shares of Class A common stock and 21,485,126
shares of Class B common stock outstanding.
On May 23, 2017, the Company issued a press release
announcing the declaration of the Stock Split, a copy of
which is attached hereto as Exhibit 99.2 and is
incorporated herein by reference.
announcing the declaration of the Stock Split, a copy of
which is attached hereto as Exhibit 99.2 and is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No.
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Description
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10.1
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Credit Agreement, dated as of May 19, 2017, among
Spark Energy, Inc., Spark HoldCo, LLC, Spark Energy, LLC, Spark Energy Gas, LLC, CenStar Energy Corp, CenStar Operating Company, LLC, Oasis Power, LLC, Oasis Power Holdings, LLC, Electricity Maine, LLC, Electricity N.H., LLC, Provider Power Mass, LLC, Major Energy Services LLC, Major Energy Electricity Services LLC, Respond Power LLC and Perigee Energy, LLC as Co-Borrowers, Coperatieve Rabobank U.A., New York Branch, as Administrative Agent, an Issuing Bank and a Bank, and Coperatieve Rabobank U.A., New York Branch and BBVA Compass, as Joint Lead Arrangers and Sole Bookrunner, and the Other Financial Institutions Signatory Thereto |
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99.1
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Press Release of Spark Energy, Inc. dated May 22,
2017 |
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99.2
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Press Release of Spark Energy, Inc. dated May 23,
2017 |
About Spark Energy, Inc. (NASDAQ:SPKE)
Spark Energy, Inc. is an independent retail energy services company. The Company provides residential and commercial customers in United States with an alternative for their natural gas and electricity. The Company operates in two segments: Retail Natural Gas Segment and Retail Electricity Segment. It operates in approximately 50 utility service territories across over 20 states and has approximately 328,000 residential customers and over 19,000 commercial customers, which translates to approximately 415,000 renewable energy credits (RCEs). The Company serves natural gas customers in over 10 states, including Arizona, California, Colorado, Connecticut, Florida, Illinois, Indiana, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Ohio and Pennsylvania, and electricity customers in over nine states, including Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio, Pennsylvania and Texas. Spark Energy, Inc. (NASDAQ:SPKE) Recent Trading Information
Spark Energy, Inc. (NASDAQ:SPKE) closed its last trading session down -0.50 at 40.00 with 159,040 shares trading hands.
