Item 1.01 Entry into a Material Definitive Agreement.
Reference is made to (i) that certain Second Joinder and Restatement Agreement, dated as of June 13, 2023 (the “Second Restatement Agreement”), by and among the New Lenders party thereto, the Letter of Credit Issuers party thereto, Nautilus Acquisition Holdings, Inc. (“Holdings”), a Delaware corporation and a wholly-owned subsidiary of National Vision Holdings, Inc. (the “Company”), National Vision, Inc. (“NVI”), a Georgia corporation and a wholly-owned subsidiary of the Company and the borrower under the Credit Agreement (as defined below), the subsidiaries of NVI party thereto, as guarantors, Bank of America, N.A. in its capacity as administrative agent and as collateral agent and (ii) the Second Amended and Restated Credit Agreement, dated as of June 13, 2023 (the “Credit Agreement”) and attached as Exhibit A thereto. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement and Second Restatement Agreement, as applicable, except for the reference to Adjusted Diluted Earnings Per Share (EPS), which is defined in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2023.
On June 13, 2023 (the “Second Restatement Effective Date”), the Second Restatement Agreement amended and restated the Joinder and Amendment and Restatement Agreement, dated as of July 18, 2019 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the Second Restatement Agreement, the “Original Credit Agreement”) to, among other things, (i) establish new first lien term loans in an aggregate principal amount of $150,000,000 (“Term A Loans”) to repay all principal, interest, fees and other amounts outstanding (other than contingent obligations) under the Original Credit Agreement immediately prior to the Second Restatement Effective Date, (ii) establish new revolving credit loans in an aggregate principal amount of $300,000,000 (the “Revolving Loans”), (iii) provide for a SOFR-based rate, with a credit spread adjustment of 10 basis points for all Interest Periods and a SOFR floor of 0.00% per annum, and (iv) as set forth below, modify the Applicable Margins used to calculate the rate of interest payable with respect to the Term A Loans and Revolving Loans (collectively, the “Loans”).
The Credit Agreement, as amended by the Second Restatement Agreement, provides that the Loans mature on the fifth anniversary of the Second Restatement Effective Date, subject to a springing maturity date, which is 91 days before the maturity date of the Company’s 2.50% convertible senior notes due 2025 if Minimum Liquidity is less than the sum of the redemption value of such convertible notes on that date plus $25,000,000 (the “Maturity Date”). Commencing on the last day of the first full fiscal quarter ended after the Second Restatement Effective Date, the Term A Loans will amortize in equal quarterly installments at a rate of 5.00% per annum. The $114,375,000.00 balance (assuming the springing maturity date does not occur) will be payable on the Maturity Date.
The new Applicable Margins are initially (i) 1.75% for the Loans that are Term SOFR loans and (ii) 0.75% for the Loans that are ABR loans. Following the delivery of the financial statements for the period ending on September 30, 2023, the Applicable Margins for the Loans will instead be based on NVI’s total leverage ratio as provided in the following schedule:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated Total Debt to Consolidated EBITDA Ratio | ABR Loans | Term SOFR Loans |
| > 2.50:1.00 | 1.25% | 2.25% |
| ≤ 2.50:1.00 but >1.75:1.00 | 1.00% | 2.00% |
| ≤ 1.75:1:00 but >0.75:1.00 | 0.75% | 1.75% |
| ≤ 0.75:1:00 | 0.50% | 1.50% |
The Second Restatement Agreement contains customary affirmative covenants, negative covenants, and events of default substantially comparable to the Original Credit Agreement.
By entering into the Credit Agreement, the Company has extended its access to $300 million in liquidity through the Revolving Loans for an additional five years through June 13, 2028. In addition, the Company currently expects no material impact on its Adjusted Diluted EPS in fiscal 2023 as a result of the Credit Agreement.
A copy of the Second Restatement Agreement, including the Credit Agreement attached as Exhibit A thereto, is filed herewith as Exhibit 10.1 and incorporated herein by reference. The above description of the Second Restatement Agreement and Credit Agreement is qualified in its entirety by reference to such exhibit.