On July 21, 2016, Copart, Inc. entered into a Second Amendment to Credit Agreement (the “Second Amendment to Credit Agreement”) by and among Copart, certain subsidiaries of Copart party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank, National Association). The Second Amendment to Credit Agreement amends certain terms of the Credit Agreement, dated as of December 3, 2014, by and among Copart, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent (as amended by the First Amendment to Credit Agreement, dated as of March 15, 2016, among Copart, certain subsidiaries thereof party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent, the “Credit Agreement”).
The Second Amendment to Credit Agreement provides for, among other things, (a) an increase in the secured revolving credit commitments by $500.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Credit Agreement to $850.0 million, (b) the repayment of existing term loans outstanding under the Credit Agreement, (c) an extension of the termination date of the revolving credit facility under the Credit Agreement from March 15, 2021 to July 21, 2021 and (d) increased covenant flexibility, including, among other things, (i) an increase in Copart’s total maximum net leverage ratio from 3.5x to 3.75x and (ii) an increase in the total net leverage ratio limit on Copart’s ability to incur additional senior pari passu debt from 2.5x to 3.25x.
Concurrent with the closing of the Second Amendment to Credit Agreement, Copart prepaid in full the outstanding $242.5 million principal amount of existing term loans under the Credit Agreement with approximately $5 million in cash on hand and the balance with loan proceeds from a drawing under the secured revolving credit commitments under the Credit Agreement. The Second Amendment to Credit Agreement reduced the pricing levels under the Credit Agreement to a range of 0.125% to 0.20% in the case of the commitment fee, 1.00% to 1.75% in the case of the applicable margin for LIBOR loans, and 0.00% to 0.75% in the case of the applicable margin for base rate loans, in each case depending on Copart’s consolidated total net leverage ratio.
The principal purpose of these financing transactions was to increase the size and operational availability under Copart’s revolving facility. Copart intends to use the proceeds of the financing, in addition to remaining availability under the secured revolving loan facility, for general corporate purposes, including working capital and capital expenditures as well as potential share repurchases, acquisitions, or other investments relating to Copart’s expansion strategies in domestic and international markets.
Copart, Inc., headquartered in Dallas, TX, is a provider of online vehicle auction and remarketing services in the United States, Canada, and the United Kingdom
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