ProSight Global, Inc. entered into a Credit Agreement, with Truist Bank (“Truist”), as administrative agent, issuing bank, and swingline lender. Suntrust Robinson Humphrey, Inc. and Citizens Bank N.A. (“Citizens”) are joint lead arrangers and Citizens is syndication agent.
The Credit Agreement provides for (i) a delayed draw term loan facility in the aggregate principal amount of up to $165,000,000 (the “Term Loan Facility”), none of which was drawn at closing, (ii) a revolving credit facility of up to $35,000,000 (the “Revolving Credit Facility”), for which commitments have not yet been obtained, and (iii) an uncommitted incremental loan facility of up to $50,000,000. In addition, the Credit Agreement includes a letter of credit sub-limit of up to $5,000,000 and a swingline loan sub-limit of up to $5,000,000.
The Term Loan Facility may be funded in a single drawing from the Effective Date to the date that is the earlier of (a) November 30, 2020 and (b) such date on which the maximum amount of the Term Loan Facility has been drawn. The Revolving Credit Facility terminates on the earliest of June 11, 2023, and the date on which the Revolving Credit Facility is either terminated or accelerated, in each case, in accordance with the terms of the Credit Agreement (the earliest of such dates, the “Revolving Credit Termination Date”). The Credit Agreement matures on June 11, 2023 (the “Maturity Date”). Any amounts borrowed under the Term Loan Facility are required to be repaid on the earlier of the Maturity Date and the date on the Term Loan Facility is accelerated in accordance with the terms of the Credit Agreement. Any amounts borrowed under the Revolving Credit Facility are required to be repaid no later than the Revolving Credit Termination Date. ProSight is permitted to make voluntary prepayments at any time, in whole or part, without payment of a premium or penalty.
ProSight may only use the Term Loan Facility to repay its $140.0 million of 7.5% Senior Unsecured Notes and $25.0 million of 6.5% Senior Notes, in each case due in November 2020. ProSight may use the Revolving Credit Facility to provide for working capital and other general corporate purposes.
At ProSight’s option, borrowings under the Term Loan Facility and the Revolving Credit Facility would be (i) a “Base Rate Borrowing” which would bear interest at the Base Rate (as defined below) plus the Applicable Margin (as described below), or (ii) an “Eurodollar Borrowing” which would bear interest at the Adjusted LIBO Rate (defined as reserve-adjusted LIBOR, subject to a floor of 0.75%), for periods of one, two, three or six months, plus the Applicable Margin. The Base Rate is the highest of (a) the rate of interest announced publicly by Truist as its prime lending rate, (b) 0.5% above the federal funds rate, (c) the Adjusted LIBO Rate determined on a daily basis for a one-month period (subject to a floor of 0.75%) plus 1.00%, and (d) zero percent. The Applicable Margin for a Eurodollar Borrowing will range from 2.00% to 3.25% per annum based upon ProSight’s Debt to Capitalization Ratio (as defined in the Credit Agreement) in effect on such date. The Applicable Margin for Base Rate Borrowings is 100 basis points lower than the Applicable Margin for Eurodollar Borrowings. The initial Applicable Margin will be 3.00% and will apply from the Effective Date until the date by which ProSight is required to deliver financial statements for the fiscal quarter ending June 30, 2020. Following such date, the Applicable Margin will be determined as set forth above.
ProSight has agreed to pay a ticking fee with respect to the undrawn portion of the commitments for the Term Loan Facility, ranging from 0.20% to 0.30% per annum based upon ProSight’s Debt to Capitalization Ratio (as defined in the Credit Agreement) in effect on such date. ProSight has also agreed to pay a commitment fee on the unused portion of the Revolving Credit Facility (once committed), ranging from 0.20% to 0.30% per annum and determined in the same way as ticking fee with respect to the Term Loan Facility. The initial ticking fee and commitment fee (if applicable) will be 0.30% and will apply from the Effective Date until the date by which ProSight is required to deliver financial statements for the fiscal quarter ending June 30, 2020. Following such date, the ticking fee and the commitment fee will be determined as set forth above.
The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to ProSight and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, certain fundamental changes, dispositions of assets, and certain restricted payments, in each case subject to limitations and exceptions set forth in the Credit Agreement.
The Credit Agreement contains financial covenants that require ProSight and its subsidiaries (i) to not exceed a maximum consolidated total debt to capitalization ratio, (ii) to maintain a minimum consolidated net worth amount, which amount increases on a quarterly basis, and (iii) to maintain minimum risk-based capital ratio requirements with respect to its insurance subsidiaries on a combined basis.
In addition, the Credit Agreement contains customary events of default that include, among other things, certain payment defaults, covenant defaults, cross-defaults to other material indebtedness, change of control defaults, judgment defaults, and bankruptcy and insolvency defaults. If an event of default exists, the lenders may require immediate payment of all obligations under the Credit Agreement and may exercise certain other rights and remedies provided for under the Credit Agreement, the other loan documents and applicable law.