8-K: Repay Holdings Secures $250 Million Revolving Credit Facility, Bolstering Financial Flexibility

Repay Holdings Corporation has successfully closed a $250 million senior secured revolving credit facility, expanding its previous $185 million facility.

Summary

• Repay Holdings Corporation has finalized a new $250 million senior secured revolving credit facility.
• This agreement replaces and increases the company's prior $185 million revolving credit facility.
• The new facility is secured by a first priority security interest in substantially all tangible and intangible property of the company and certain subsidiaries.
• The credit facility matures on the earlier of the fifth anniversary of the closing date, 91 days prior to the maturity of the 2026 convertible notes, or 91 days prior to the maturity of the 2029 convertible notes, with potential extensions subject to certain conditions.
• Interest rates are based on Term SOFR plus a margin between 1.75% and 2.75%, or a base rate option, with margins depending on the total net leverage ratio.
• The company can prepay the facility without any premium.
• The agreement includes covenants such as maintaining a maximum secured net leverage ratio of 2.0 to 1.0 (or 2.5 to 1.0 after a material acquisition) and a minimum interest coverage ratio of 3.0 to 1.0.
• The company's applicable indebtedness will be reduced by unrestricted cash and permitted investments, not to exceed the greater of $86 million or 65% of consolidated EBITDA.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment due to the successful closing of the increased credit facility, which is expected to support the company's growth. However, the presence of financial covenants and security interests tempers the overall optimism.

Positives

• The new credit facility provides increased financial flexibility for Repay.
• The company has the option to prepay the facility without incurring any penalties.
• The facility's maturity date can be extended, subject to certain terms and conditions.
• The company has access to a larger credit line, which can support future growth and strategic initiatives.

Negatives

• The credit facility is secured by a first priority security interest in substantially all tangible and intangible property of the company and certain subsidiaries.
• The company is subject to financial covenants, including a maximum secured net leverage ratio and a minimum interest coverage ratio.

Risks

• The company's ability to meet the financial covenants could be impacted by changes in market conditions or business performance.
• The company's assets are pledged as collateral, which could be at risk in the event of a default.
• The maturity date of the facility is tied to the maturity of the convertible notes, which could create refinancing risk if the notes are not refinanced or extended.

Future Outlook

The company intends to use the new credit facility, along with its recent convertible notes offering, to focus on profitable growth and cash generation.

Management Comments

• John Morris, Co-founder and CEO of REPAY, stated that the new facility is intended to provide REPAY with financial flexibility to continue focusing on profitable growth and cash generation.

Industry Context

This announcement reflects a common strategy for companies to secure financial resources for growth and operational flexibility. The expansion of the credit facility indicates confidence in the company's future prospects and its ability to manage increased debt.

Comparison to Industry Standards

• The terms of the credit facility, including the interest rate and leverage ratios, are generally consistent with industry standards for companies of similar size and credit profile.
• The use of Term SOFR as a benchmark is in line with current market practices.
• The inclusion of financial covenants such as leverage and interest coverage ratios is standard in credit agreements of this type.
• The ability to prepay without premium is a favorable term for the company, providing flexibility in managing its debt.

Stakeholder Impact

• Shareholders will benefit from the increased financial flexibility and potential for growth.
• Employees will have more job security due to the company's improved financial position.
• Customers will benefit from the company's ability to invest in its products and services.
• Suppliers will have more confidence in the company's ability to meet its obligations.
• Creditors will have a more secure position due to the company's improved financial stability.

Next Steps

• The company will continue to focus on profitable growth and cash generation.
• The company will manage its debt and financial obligations in accordance with the terms of the credit agreement.

Key Dates

Keywords

revolving credit facility, senior secured, credit agreement, financial flexibility, payment processing, leverage ratio, interest coverage, convertible notes, Truist Bank, Term SOFR