Item 1.01. Entry into a Material Definitive Agreement.
On June 23, 2023, OPENLANE, Inc. (the “Company”) entered into a Credit Agreement (the “Credit Agreement”) among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”). The Credit Agreement replaces the Company’s existing Amended and Restated Credit Agreement, dated as of March 11, 2014 (as amended by that certain Incremental Commitment Agreement and First Amendment, dated as of March 9, 2016, Incremental Commitment Agreement and Second Amendment, dated as of May 31, 2017, Third Amendment Agreement, dated as of September 19, 2019, Fourth Amendment Agreement, dated as of May 29, 2020, and Fifth Amendment Agreement, dated as of September 2, 2020), by and among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Original Credit Agreement”). The Original Credit Agreement was terminated substantially concurrently with the Company’s entry into the Credit Agreement and all outstanding amounts and commitments thereunder have been repaid in full and terminated.
The Credit Agreement provides for a five-year revolving credit facility in an aggregate principal amount of $325,000,000 (the “Revolving Credit Facility”). The Revolving Credit Facility also includes a $65,000,000 sublimit for the issuance of letters of credit and a $60,000,000 sublimit for swingline loans, which can be borrowed on same-day notice. Any proceeds of the Revolving Credit Facility that were not applied to refinance the indebtedness under the Original Credit Agreement may be used for ongoing working capital needs and general corporate purposes of the Company and its subsidiaries.
Loans under the Revolving Credit Facility will bear interest at a rate calculated based on the type of borrowing (at the Company’s election, either Adjusted Term SOFR Rate or Base Rate (each as defined in the Credit Agreement)) and the Company’s Consolidated Senior Secured Net Leverage Ratio, with such rate ranging from 2.75% to 2.25% for Adjusted Term SOFR Rate loans and from 1.75% to 1.25% for Base Rate loans. The Company will also pay a commitment fee between 25 to 35 basis points, payable quarterly, on the average daily unused amount of the Revolving Credit Facility based on the Company’s Consolidated Senior Secured Net Leverage Ratio.
The obligations of the Company under the Revolving Credit Facility are guaranteed by certain of the Company’s domestic subsidiaries (the “Subsidiary Guarantors”) and are secured by substantially all of the assets of the Company and the Subsidiary Guarantors, including but not limited to: (a) pledges of and first priority perfected security interests in 100% of the equity interests of certain of the Company’s and the Subsidiary Guarantors’ domestic subsidiaries and 65% of the equity interests of certain of the Company’s and the Subsidiary Guarantors’ first tier foreign subsidiaries and (b) perfected first priority security interests in substantially all other assets of the Company and each Subsidiary Guarantor, subject to certain exceptions.
The Credit Agreement contains affirmative and negative covenants that are customary for a senior secured credit agreement. The negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with the affiliates. The Credit Agreement also requires the Company to maintain a maximum Consolidated Senior Secured Net Leverage Ratio not to exceed 3.50:1.00 as of the last day of each fiscal quarter (commencing with September 30, 2023) on which any loans under the Revolving Credit Facility are outstanding.
Certain of the lenders and agents and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking, commercial banking and other services for the Company and its affiliates, for which they received or will receive customary fees and expenses.
The above description of the Credit Agreement is not complete and is qualified in its entirety by reference to the full text of the Credit Agreement. The Credit Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.