8-K: MillerKnoll Refinances and Extends Credit Facilities, Amends Leverage Ratio

MillerKnoll refinanced its existing credit facilities, extending maturity dates and amending the maximum permitted leverage ratio.

Summary

• MillerKnoll, Inc. entered into Amendment No. 3 to its Credit Agreement on April 17, 2025, to refinance and extend its senior secured financing.
• The amendment refinances the Existing Term Loan A Facility with a new $400 million term loan A facility and the Existing Revolving Credit Facility with a new $725 million revolving credit facility.
• The proceeds were used to repay the Existing Term Loan A Facility and the Existing Revolving Credit Facility, and to pay related fees and expenses.
• As of the Closing Date, the Credit Agreement provided for Senior Facilities in an aggregate principal amount of $1,750.0 million, and the Refinanced Revolving Credit Facility had outstanding borrowings of $385.0 million.
• Borrowings under the Pro Rata Facilities bear interest at a rate per annum equal to, at the Company's option, either (x)(1) Term SOFR or Daily Simple SOFR for loans denominated in U.S. dollars or (2) Daily SONIA for loans denominated in pounds sterling (in each case, subject to a 0.00% floor) (such loans, collectively, RFR Loans ), (y) solely in respect of borrowings under the Refinanced Revolving Credit Facility, (1) EURIBOR for loans denominated in euros or (2) CIBOR for loans denominated in Danish krone (in each case, subject to a 0.00% floor) (such loans, collectively, Eurocurrency Loans ), or (z) a base rate (such loans, ABR Loans ), in each case plus an applicable margin.
• The applicable margin for borrowings under each of the Pro Rata Facilities varies depending on the Company's first lien secured net leverage ratio.
• The Refinanced Term Loan A Facility matures on the five-year anniversary of the Closing Date and amortizes in equal quarterly installments.
• The Refinanced Revolving Credit Facility matures on the five-year anniversary of the Closing Date.
• The Pro Rata Facilities require that the Company maintain a maximum first lien secured net leverage ratio of 4.00 to 1.00, which may be temporarily increased to 4.50 to 1.00 following certain permitted acquisitions.

Sentiment

Score: 7

Explanation: The document is a standard financial announcement about refinancing and extending credit facilities. It is generally positive as it provides the company with greater financial flexibility.

Positives

• The refinancing extends the maturity dates of the credit facilities, providing MillerKnoll with greater financial flexibility.
• The amendment provides for Senior Facilities in an aggregate principal amount of $1,750.0 million.

Risks

• The company is required to maintain a maximum first lien secured net leverage ratio, which could limit its ability to take on additional debt or make certain investments.
• The applicable margin for borrowings under the Pro Rata Facilities varies depending on the Company's first lien secured net leverage ratio.

Future Outlook

Proceeds of any loans under the Refinanced Revolving Credit Facility borrowed after the Closing Date and letters of credit will be used for general corporate purposes.

Industry Context

Refinancing and extending credit facilities is a common practice for companies to manage their debt and improve their financial flexibility. The amendment of the leverage ratio suggests a strategic adjustment to capital structure.

Comparison to Industry Standards

• Comparable companies in the furniture and home furnishings industry, such as Herman Miller (now MillerKnoll), Steelcase, and HNI Corporation, often utilize a mix of term loans and revolving credit facilities to finance operations and growth.
• The specific leverage ratios and interest rates are tailored to the individual company's financial profile and market conditions.
• For example, Steelcase has also used revolving credit facilities and term loans to manage its liquidity and capital needs.
• HNI Corporation has similarly employed a combination of debt instruments to fund acquisitions and organic growth initiatives.

Stakeholder Impact

• Shareholders: The refinancing provides greater financial stability and flexibility, which could be viewed positively.
• Employees: No immediate impact.
• Customers: No immediate impact.
• Suppliers: No immediate impact.
• Creditors: The refinancing extends the maturity dates of the debt, which could be viewed positively.

Next Steps

• MillerKnoll will use the proceeds from the refinanced facilities for general corporate purposes.
• The company will continue to manage its debt and leverage ratio in accordance with the amended Credit Agreement.

Key Dates

Keywords

credit agreement, refinance, term loan, revolving credit, leverage ratio, MillerKnoll, financing