Section 1.01 Entry into Material Definitive Agreement.
On June 9, 2022 (the “Closing Date”), LucidGroup, Inc. (the “Company”) has entered into a credit agreement (the “credit agreement”) with Bank of America, North America., as administrative agent (the “Administrative Agent”), as principal lender and as issuing bank, and each other lender and issuing bank party thereto from time to time, governing a new $1.0 billion senior secured revolving asset-based credit facility (the “ABL Credit Facility”), upon which the Company and each other borrower party thereto (the “Borrowers”) may draw from time to time, subject to terms and conditions set forth therein. The ABL credit facility includes a $350.0 million letter of credit sub-facility and a $100.0 million swingline lending sub-facility. Subject to certain terms and conditions, including obtaining such new commitments, the Company may from time to time request one or more increases in the amount of credit commitments under the ABL Credit Facility for an aggregate amount of up to the sum of $500.0 million plus certain other amounts.
At the closing date, there were no borrowings and no letters of credit outstanding under the ABL credit facility.
The ABL Credit Facility has an initial aggregate principal commitment amount of up to $1.0 billion, with availability from time to time subject to the value of the borrowing base which, subject to the eligibility criteria set out in the credit agreement, is equivalent to the sum of, from time to time, (i) 85% of the Eligible Receivables of the Lending Parties (as defined below) (other than Eligible Credit Card Receivables and Eligible Investment Grade Receivables), plus (ii) 90.0% of the Eligible Investment Grade Receivables of the Parties lenders, plus (iii) 90.0% of eligible credit the lending parties’ card receivables, plus (iv) the lesser of (x) 75% of the lesser of the cost or market value of the lending parties’ eligible inventory , determined on a first-in, first-out basis and (y) 85% of the estimated net orderly liquidation value of the eligible inventories of the loaning parties valued at the lower of cost or market value, determined on a first-in basis , first out, more (v) before t the date of release of fixed assets (as defined in the credit agreement), the lesser of (x) 75% of the r of the cost or market value of the loan parties’ eligible machinery and equipment and (y) 85% of the estimated net orderly liquidation value of the eligible machinery and equipment of the loaning parties, plus (vi) prior to the date of release of fixed assets, 50% of the estimated fair market value of certain qualifying real estate held by the loaning parties plus (vii) 100% of eligible money (as defined in the credit agreement), less (viii) customary reserves and other adjustments (including with respect to the real estate component). The amount included in the borrowing base in accordance with clauses (v) and (vi) above may not exceed, in aggregate, (x) at any time before the second anniversary of the Completion Date, 50% of the base borrowing base and (y) from the second anniversary of the Closing Date, 35% of the borrowing base.
Currency, interest rate and fees
Extensions of credit under the ABL Credit Facility may be denominated in WE
dollars, pounds sterling, euros, Canadian dollars, Australian dollars, Swiss francs, Japanese yen and other currencies agreed upon from time to time. Borrowings under the ABL Credit Facility bear interest at an annual rate equal to (i) for amounts denominated in WE Dollars, at the option of the Company, either (A) the “Alternate Base Rate” (as defined in the Credit Agreement) plus a margin of 0.25% to 0.75% or (B) the “SOFR Rate Term” (as defined in the Credit Agreement Agreement) (which includes a credit spread adjustment of 10 basis points per annum) plus a margin of 1.25% to 1.75%, (ii) for amounts denominated in Canadian dollars, at the option of the Company, either (A) the “Canadian prime rate” (as defined in the Credit Agreement) plus a margin of 0.25% to 0.75% or (B ) the “CDOR Rate” (as defined in the Credit Agreement) plus a margin of 1.25% to 1.75%, (iii) for amounts denominated in pounds sterling or Swiss francs, the “daily rate of the applicable alternative currency” (as defined in the credit agreement) plus a margin of 1.25% to 1.75% and (iv) for amounts denominated in euros, Australian dollars, Japanese yen or any other foreign currency applicable available in ver you under the ABL Credit Facility from time to time, the applicable “Alternate Currency Forward Rate” (as defined in the Credit Agreement) plus a margin of 1.25% to 1.75%. Each applicable margin set forth above will be determined based on the average quarterly availability under the ABL Credit Facility.
In addition to paying interest on the principal outstanding under the ABL Credit Facility, borrowers are required to pay a quarterly commitment fee to lenders under the ABL Credit Facility in respect of unused revolving commitments in thereunder at a rate of commitment fee equal to 0.25% per annum. Borrowers will also pay the usual letter of credit fees.
Borrowings under the ABL Credit Facility mature, and covenants thereunder terminate, on the earlier of: (i) June 9, 2027 and (ii) the date which is 91 days prior to the stated due date of certain material indebtedness for borrowed money incurred by any of the Borrowers or their restricted subsidiaries for an aggregate principal amount of at least $500.0 million.
If, at any time, the sum of the amounts outstanding under the ABL Credit Facility exceeds the lesser of (i) the Borrowing Base and (ii) the total Revolving Commitments under the ABL Credit Facility (which lower amount, the “Line Cap”), the Company is required to repay outstanding loans and/or secured letters of credit in cash for an aggregate amount equal to such excess.
Guarantees and Security
The obligations under the ABL Credit Facility are guaranteed by the Company, each other Borrower, if any, and certain other national subsidiaries of the Company (collectively, the “Loan Parties”). The obligations under the ABL Credit Facility and the guarantees for such obligations are initially secured by a perfected first ranking charge over substantially all of the assets of the loan parties, subject to certain exceptions, including the exclusion of Intellectual property.
Certain covenants and events of default
Prior to the date on which (i) the fixed charge coverage ratio is greater than 1.00 to 1.00 for at least two consecutive fiscal quarters, in each case on a four consecutive fiscal quarter basis, and (ii) the Company has elected to ensure that on the entry into force of the Fixed Charge Ratio Commitment (the “FCCR Commitment Trigger Date”), borrowers are required to maintain at all times a “Liquidity” (as defined in the Credit Agreement) of at least the dollar equivalent of $1.0 billion. After the FCCR Commitment Trigger Date, if the “Specified Availability” (as defined in the Credit Agreement) is less than the greater of (A) $62.5 million and (B) 12.5% of the Line Cap (a “Compliance Period Trigger Event”), the Company is required to meet a minimum Fixed Charge Coverage Ratio of at least 1.00 to 1, 00 at the end of (x) the last quarter immediately preceding . . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure required by this section is included in Section 1.01 of this current Report on Form 8-K and is incorporated herein by reference.
Section 7.01 Disclosure of FD Rules.
On June 15, 2022, the Company has issued a press release regarding its conclusion of the Credit Agreement. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained in this Section 7.01 and Exhibit 99.1 hereto is provided and is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) , and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly provided by specific reference in such filing.
Item 9.01 Financial statements and supporting documents.
Number Description of Exhibit
10.1 Credit Agreement, dated as of June 9, 2022, by and among Lucid Group,
Inc., as the Borrower Representative, the other Borrowers party thereto
from time to time, the Lenders and Issuing Banks from time to time party
thereto and Bank of America, N.A., as Administrative Agent.
99.1 Press Release dated June 15, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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