Section 1.01 Entering into a Material Definitive Agreement.
On August 1, 2022, Broadstone Net Lease, Inc. (the company”), Broadstone Net Bail, LLCthe Company’s operating company (the “Operating Company”) as borrower, Bank of Regionsas administrative agent (the “Administrative Agent”), and the lenders parties thereto (collectively, the “Lenders”) have entered into a term credit agreement (the “Loan Agreement”), which provides : (i) a facilitated term loan for an aggregate principal amount of $300 million (the “Term Loan Facility I”) maturing on August 1, 2029 (the “Term Loan Maturity Date”); and (ii) a term loan facility in the aggregate principal amount of $200 million (the “Term Loan Facility II” and, collectively with the Term Loan Facility I, the “Term Loan Facilities”) due on August 1, 2027 (the “Term Loan II Maturity Date”).
The Term Loan Facility I bears interest at the Operating company choice, at a rate equal to (i) the fluctuating base rate (based on The Wall Street Journal “Prime Rate” or as otherwise specified in the Loan Agreement) plus an applicable margin (varying from 0.15% to 1.20%), or (ii) the applicable benchmark rate for term benchmark loans or RFR loans (based on the overnight rate guaranteed or as otherwise specified in the loan agreement) plus an applicable margin (varying from 1.15% to 2.20%). Based on Operating company current investment grade credit rating of Baa2 / BBB, applicable margin for Term Loan Facility I equals 0.25% per annum for base rate loans and 1.25% for term loans reference or RFR loans.
The Term Loan Facility II bears interest at the Operating company choice, at a rate equal to (i) the fluctuating base rate (based on The Wall Street Journal “Prime Rate” or as otherwise specified in the Loan Agreement) plus an applicable margin (varying from 0.00% to 0.60%), or (ii) the applicable reference rate for the reference term loans or RFR loans (based on the overnight secured funding rate or as otherwise specified in the Loan Agreement) plus an applicable margin (varying from 0.80% to 1.60%). Based on Operating company current investment rating of Baa2 / BBB, applicable margin for Term Loan Facility I is 0.00% per annum for base rate loans and 0.95% for benchmark term loans or RFR loans.
There is no scheduled principal amortization of loans outstanding under the term loan facilities. Any outstanding principal amount is due and payable on the Term Loan I Maturity Date or on the Term Loan II Maturity Date, as the case may be.
The operating company may voluntarily prepay all or any portion of outstanding Loans at any time without premium or penalty upon three business days written notice, provided that each Voluntary Prepayment of Term Loans (other than a prepayment of all outstanding term loans of a category) either for a cumulative minimum amount of: $2,000,000 and in multiples of $100,000 beyond this for term benchmark loans, and $500,000 and in multiples of $100,000 beyond for base rate loans and RFR loans. The operating company cannot re-borrow any portion of term loans once they have been repaid. Notwithstanding the foregoing, the Operating company shall pay a prepayment premium equal to: (i) 2% of the then unpaid principal balance of the Term Loan Facility I if such facility is voluntarily prepaid before August 1, 2023; and (ii) 1% of the then outstanding principal balance of Term Loan Facility I if such facility is voluntarily prepaid prior to August 1, 2024.
The Loan Agreement contains certain covenants customary for an agreement of this type, including: (i) covenants, including but not limited to restrictions on indebtedness and additional liens, the ability to to make certain payments and investments, and the ability to enter into certain merger, consolidation, sale of assets and affiliation transactions; and (ii) financial safeguards, including, but not limited to, a minimum unsecured interest expense coverage ratio, a maximum leverage ratio, a maximum secured indebtedness ratio and a coverage of minimum fixed charges. The loan agreement also contains representations and warranties, positive clauses, including financial reporting requirements, negative clauses and events of default, including certain cross-defaults with other debts of the company, customary for such an agreement. As set forth in the Loan Agreement, certain events of default could result in the acceleration of the maturity of amounts due and the termination of all of the lenders’ loan commitments under the Loan Agreement.
The loan agreement includes an accordion feature to increase the overall size of the installation from $500,000,000 at $800,000,000subject to the willingness of existing or new lenders to fund this increase and other customary conditions.
Certain of the Lenders, the Administrative Agent and their respective affiliates have provided, and may in the future provide, various commercial banking, investment banking, lending and other financial and advisory services for the Company and its affiliates for which they have received, and will receive, customary fees and expenses. The operating company and certain of its subsidiaries have, and may in the future, enter into derivative agreements with certain of the lenders and their affiliates.
As part of the Loan Agreement, the Company has agreed to unconditionally guarantee (the “Guarantee”) the payment and performance when due, whether on maturity, by acceleration or otherwise, of all debts, debts, obligations, commitments and rights owed by the Operating company to the Administrative Agent or any Lender under or in connection with the Loan Agreement and any other document relating thereto.
The foregoing description of the terms of the Loan Agreement and Security is not complete and is qualified in its entirety by reference to the copies of the Loan Agreement and Security filed as Exhibit 10.1 and Exhibit 10.2 herein, respectively, and incorporated herein by reference. . ————————————————– ——————————
Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure included in item 1.01 above is incorporated herein by reference.
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