Item 1.01.
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Entry into a Material Definitive Agreement.
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On January 17, 2018, WEX Inc. (the “Company”) entered into the Third Amendment (the “Third Amendment”) to the Credit Agreement, dated as of July 1, 2016, among the Company, the subsidiaries of the Company identified therein and Bank of America, N.A., as administrative agent, and the lenders party thereto, as amended by the First Amendment to Credit Agreement dated July 3, 2017 and the Second Amendment to Credit Agreement dated October 30, 2017 (the “Original Credit Agreement” and, as amended by the Third Amendment, the “Credit Agreement”). The Third Amendment (i) reduces the applicable interest rate margin for the Company’s tranche B-2 term loans by 50 basis points for both LIBOR borrowings and base rate borrowings, (ii) increases commitments under the Company’s tranche B-2 term loans from $1,182,000,000 to $1,335,000,000,
and (iii) makes certain other changes to the Original Credit Agreement, including without limitation, (a) increasing by 0.25x the maximum consolidated leverage ratio for the test periods ending December 31, 2018 through September 30, 2019, (b) resetting and amending the test for incremental facilities under the Credit Agreement, (c) allowing a permanent increase of 0.50x in the maximum consolidated leverage ratio following an acquisition that meets certain specified criteria, (d) permitting the incurrence of unsecured indebtedness as long as the Company is in pro forma compliance with the financial covenants, (e) amending the pro forma basis determination methodology, (f) modifying the provisions relating to setting interest rates in the event LIBOR is unavailable, (g) resetting the six month soft call period for a repricing of the tranche B-2 term loans, and (h) reducing the required annual excess cash flow payment by any increase in equity investments. Following the repricing, the applicable interest rate margin for the tranche B term loans will be set at 2.25% for LIBOR borrowings and 1.25% for base rate borrowings.
In connection with the execution of the Third Amendment, the Company paid certain customary fees and expenses of Bank of America, N.A. in its capacity as administrative agent, joint lead arranger and joint bookrunner. MUFG Union Bank, N.A., SunTrust Robinson Humphrey, Inc., and Citizens Bank, N.A., also acted as joint lead arrangers and joint bookrunners, and Bank of Montreal acted as documentation agent.
The foregoing summary of the Third Amendment is qualified in its entirety by the complete text of the Third Amendment, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference as if fully set forth herein.