Item 1.01 Entry into a Material Definitive Agreement.
Fifth Amendment to Credit Agreement
On April 21, 2022 (the "Fifth Amendment Effective Date"), SP Plus Corporation, aDelaware corporation (the "Company"), entered into a fifth amendment (the "FifthAmendment") to the Company's credit agreement (as amended prior to the FifthAmendment Effective Date, the "Credit Agreement"; the Credit Agreement, asamended by the Fifth Amendment, the "Amended Credit Agreement") with Bank ofAmerica, N.A. ("Bank of America"), as Administrative Agent, swing-line lenderand a letter of credit issuer; certain subsidiaries of the Company, asguarantors; and the lenders party thereto (the "Lenders"), pursuant to which theLenders have made available to the Company a senior secured credit facility (the"Senior Credit Facility"). Prior to the Fifth Amendment Effective Date andpursuant to the fourth amendment (the "Fourth Amendment") to the Company'scredit agreement, which was entered into on February 16, 2021, the Senior CreditFacility permitted aggregate borrowings of $550.0 million consisting of (i) arevolving credit facility of up to $325.0 million at any time outstanding, whichincluded a letter of credit facility that was limited to $100.0 million at anytime outstanding, and (ii) a term loan facility of $225.0 million (the entireprincipal amount of which the Company drew on November 30, 2018). Among otherthings, the Fifth Amendment extended the maturity date of the Senior CreditFacility to April 21, 2027 and increased the aggregate commitments under therevolving credit facility by $75.0 million to $400.0 million. Prior to the FifthAmendment Effective Date, the outstanding principal balance under the term loanfacility was $182.8 million. Pursuant to the terms of the Fifth Amendment, theCompany received an additional advance under the term loan facility in anaggregate principal amount of $17.2 million so that as of the Fifth AmendmentEffective Date, the term loan facility was $200 million (the entire principalamount of which the Company drew on April 21, 2022).
In addition, the Fifth Amendment transitioned all loans under the Senior CreditFacility that bore interest at the London Interbank Offered Rate ("LIBOR") to aforward-looking SOFR term interest rate administered by CME ("Term SOFR"). As ofthe Fifth Amendment Effective Date, borrowings under the Senior Credit Facilitybear interest, at the Company's option, at the applicable margin plus (i) TermSOFR plus a credit spread adjustment, subject to a "floor" on Term SOFR of0.00%, or a successor rate to SOFR approved in accordance with the terms of theAmended Credit Agreement or (ii) a base rate consisting of the highest of (x)the federal funds rate plus 0.5%, (y) the Bank of America prime rate and (z) adaily rate equal to Term SOFR for an interest period of one-month plus 1.0%. Theapplicable margin is based on the Company's ratio of consolidated total debt(net of up to $30.0 million in unrestricted cash and cash equivalents) to EBITDAfor the 12-month period ending as of the last day of the immediately precedingfiscal quarter (the "Consolidated Leverage Ratio"), determined in accordancewith the applicable pricing levels set forth in the Credit Agreement. The FourthAmendment provided that until the compliance certificate for June 30, 2022 wasdelivered, the applicable margin for all loans under the Senior Credit Facilitywould be 2.75% for LIBOR loans and 1.75% for Base Rate Loans. The FifthAmendment eliminated these fixed applicable margin rates.
In addition, the Fifth Amendment eliminated the requirement that the Companyrepay its revolving loans at any time cash on hand exceeded $40.0 million for aperiod of three consecutive business days. The Fifth Amendment also eliminatedrestrictions on certain Investments, Permitted Acquisitions, Restricted Paymentsand Prepayments of Subordinated Debt (each as defined in the Amended CreditAgreement) that were imposed by the Fourth Amendment.
Prior to the Fifth Amendment Effective Date, the maximum Consolidated LeverageRatio was 5.25:1.0 for the fiscal quarter ending September 30, 2021, withcertain step-ups and step-downs described in the Credit Agreement, including astep down to a maximum Consolidated Leverage Ratio of 4.00:1.00 for the fiscalquarter ending December 31, 2023 and each fiscal quarter ending thereafter. TheFifth Amendment amended the Consolidated Leverage Ratio covenant to provide thatthe maximum Consolidated Leverage Ratio will be 4.50:1.0 for the fiscal quartersending March 31, 2022, June 30, 2022 and September 30, 2022, 4.25:1.0 for thefiscal quarters ending December 31, 2022, March 31, 2023, June 30, 2023 andSeptember 30, 2023, and 4.00:1.00 for the fiscal quarter ending December 31,2023 and each fiscal quarter ending thereafter. In addition, the Fifth Amendmentadded a covenant holiday option to the Consolidated Leverage Ratio covenant,which allows the Company to elect to raise the maximum Consolidated LeverageRatio up to 4.50:1.0 for a fiscal quarter in which an acquisition involvingconsideration in excess of $50.0 million would be consummated, subject to theconditions in the Amended Credit Agreement.
Prior to the Fifth Amendment Effective Date, the Company was required tomaintain a minimum consolidated interest coverage ratio of not less than1.60:1.0 for the fiscal quarter ending March 31, 2021, with certain step-ups andstep-downs described in the Credit Agreement, including a step up to a minimumconsolidated interest coverage ratio of not less than 3.50:1.0 for the fiscalquarter ending June 30, 2022 and thereafter. The Amended Credit Agreementprovides that the Company shall maintain a minimum consolidated interestcoverage ratio of 3.5:1.0 for the fiscal quarter ending March 31, 2022 and eachfiscal quarter thereafter.
The forgoing description of the Fifth Amendment is not complete and is qualifiedin its entirety by reference to the full text of the Fifth Amendment, a copy ofwhich is filed as Exhibit 10.1 hereto.
The information set forth in Item 1.01 above is hereby incorporated by referenceunder this Item 2.03.
Item 9.01.Financial Statements and Exhibits.
(d) Exhibits
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