Item 1.01 Entry into a Material Definitive Agreement.
Indenture for 5.625% Senior Notes Due 2030
On December 13, 2021, FirstCash, Inc. (the “Company”) closed its previously announced private offering of $550,000,000 of 5.625% senior notes due 2030 (the “Notes”), representing an increase of $25 million in aggregate principal amount from the previously announced proposed offering size. The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a purchase agreement between the Company, certain domestic subsidiaries of the Company and Jefferies LLC, as representative of the several initial purchasers (the “Initial Purchasers”).
The Company intends to use the proceeds from the offering of the Notes to finance the cash consideration of the previously announced pending acquisition (the “Acquisition”) of American First Finance Inc. (“AFF”), repay in full the outstanding debt under AFF’s credit facility, to pay fees, costs and expenses incurred in connection with the Acquisition and the offering of the Notes and the remainder (if any) to repay a portion of the borrowings under the Company’s senior unsecured revolving credit facility. In the event that (i) the Acquisition is not consummated on or prior to March 31, 2022 (the “Outside Date”) or (ii) the Company notifies BOKF, NA, which is serving as trustee for the Notes, of its abandonment or termination of the business combination agreement dated as of October 27, 2021, as amended, by and among the Company, AFF and the other parties thereto, or its determination that the Acquisition will not be consummated by the Outside Date, the Notes will be subject to a special mandatory redemption at a price equal to 100% of the initial issue price of the Notes plus accrued and unpaid interest from the date of the issuance of the Notes to, but excluding the date of such special mandatory redemption. However, the Company has received all required antitrust, regulatory and other third party approvals for the closing of the Acquisition and, as a result, expects to close the Acquisition on or around December 17, 2021, subject to the satisfaction of the other customary closing conditions.
The Notes were issued pursuant to an Indenture (the “Indenture”), dated as of December 13, 2021, by and among the Company, the guarantors listed therein and BOKF, NA, as trustee. The Indenture provides that interest on the Notes will accrue from December 13, 2021 and is payable semiannually in arrears on January 1 and July 1 of each year, beginning on July 1, 2022, and the Notes mature on January 1, 2030.
The Company may redeem some or all of the Notes at any time on or after January 1, 2025, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest up to, but not including, the redemption date. Prior to January 1, 2025, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus the “make-whole” premium set forth in the Indenture. The Company may redeem up to 40% of the Notes on or prior to January 1, 2025 with the proceeds of certain equity offerings at the redemption prices set forth in the Indenture. If the Company sells certain assets or consummates certain change in control transactions, the Company will be required to make an offer to repurchase the Notes.
The Indenture contains certain covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur additional indebtedness, make certain dividends, repurchase Company stock or make other distributions, make certain investments, create liens, transfer or sell assets, merge or consolidate, and enter into transactions with the Company’s affiliates. Such covenants are subject to a number of important exceptions and qualifications set forth in the Indenture. The Indenture also contains certain customary events of default, including failure to make payments in respect of the principal amount of the Notes, failure to make payments of interest on the Notes when due and payable, failure to comply with certain covenants and agreements and certain events of bankruptcy or insolvency.
The preceding description of the Indenture and the Notes are summaries and are qualified in their entirety by the Indenture and the form of Notes, filed as Exhibit 4.1 hereto, which is incorporated by reference herein.
Fifth Amendment to Amended and Restated Credit Agreement
On December 8, 2021, the Company entered into the Fifth Amendment to Amended and Restated Credit Agreement (the “2021 Amendment”) for its existing U.S. revolving unsecured credit facility (the “Credit Facility”) in order to, among other things, permit the Acquisition and make certain amendments related to the Acquisition, including: (i) allow adjustments to Consolidated EBITDA (as defined in the Credit Facility) for certain expenses which will be incurred in connection with the Acquisition; (ii) increase certain baskets contained in the covenants and events of default to account for the increased scale of the business on a pro forma basis; and (iii) provide for financial covenant relief needed as a result of the Acquisition.
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