| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 12, 2022 (the “Closing Date”), Premier Healthcare Alliance, L.P. (“Premier LP”), Premier Supply Chain Improvement, Inc. (“PSCI”) and Premier Healthcare Solutions, Inc. (“PHSI”), as Co-Borrowers, and certain domestic subsidiaries of the Co-Borrowers, as Guarantors, Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), Swing Line Lender and an L/C Issuer, other lenders from time to time party thereto, and Wells Fargo Securities, LLC, BofA Securities, Inc., JPMorgan Chase Bank, N.A., PNC Capital Markets LLC and Truist Securities, Inc., as Joint Lead Arrangers and Joint Book Managers, entered into an unsecured Amended and Restated Credit Agreement, dated as of December 12, 2022 (the “Credit Agreement”). The Credit Agreement has a maturity date of December 12, 2027, subject to up to two one-year extensions at the request of the Co-Borrowers and approval of a majority of the lenders under the Credit Agreement.
The Credit Agreement provides for a revolving credit facility of up to $1.0 billion (the “Credit Facility”) with (i) a $50.0 million subfacility for standby letters of credit and (ii) a $100.0 million subfacility for swingline loans. The Credit Agreement also provides that Co-Borrowers may from time to time (i) incur incremental term loans and (ii) request an increase in the revolving commitments under the Credit Facility, together up to an aggregate of $350.0 million, subject to the approval of the lenders providing such term loans or revolving commitment increase. The Credit Agreement contains an unconditional and irrevocable guaranty of all obligations of Co-Borrowers under the Credit Agreement by the current and future Guarantors. Premier is not a guarantor under the Credit Agreement.
The Credit Agreement refinanced the Credit Agreement, dated November 9, 2018, as amended, among the Co-Borrowers, Services, certain subsidiary guarantors, the lender parties thereto and the Administrative Agent (the “Prior Loan Agreement”), and the Prior Loan Agreement was terminated on the Closing Date. The Prior Loan Agreement included a $1.0 billion unsecured revolving credit facility. The Prior Loan Agreement was scheduled to mature on November 9, 2023. At the time of its termination, outstanding borrowings, accrued interest and fees and expenses under the Prior Loan Agreement totaled $331M, which was repaid with cash on hand and borrowings under the new Credit Facility.
The Credit Agreement permits Co-Borrowers to prepay amounts outstanding under the Credit Facility without premium or penalty, provided, however, that Co-Borrowers are required to compensate the lenders for losses and expenses incurred as a result of the prepayment of any SOFR Loan. Committed loans under the Credit Agreement may be in the form of SOFR Loans or Base Rate Loans, at the option of Co-Borrowers. SOFR Loans bear interest at the secured overnight financing rate (“SOFR”) plus an adjustment of 0.10% (“Adjusted Term SOFR”) plus the Applicable Rate (defined as a margin based on the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement)). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the Administrative Agent, the federal funds effective rate plus 0.50%, the one-month Adjusted Term SOFR plus 1.0%, and 0%), plus the Applicable Rate. The Applicable Rate ranges from 1.250% to 1.750% for SOFR Loans and 0.250% to 0.750% for Base Rate Loans. On the Closing Date, the interest rate for SOFR Loans was 5.633% and the interest rate for Base Rate Loans was 7.00%. Co-Borrowers are required to pay a commitment fee ranging from 0.125% to 0.225% per annum on the actual daily unused amount of commitments under the Credit Facility. The initial amount of the commitment fee was set at 0.125%.
The Credit Agreement contains customary representations and warranties of Co-Borrowers and Guarantors (collectively, the “Loan Parties”) for the benefit of the Administrative Agent and the lenders. The Credit Agreement also contains customary affirmative and negative covenants, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments. Under the terms of the Credit Agreement, the Loan Parties are not permitted to allow the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) to exceed 3.75 to 1.00 for any period of four consecutive fiscal quarters, provided that, in connection with any acquisition for which the aggregate consideration exceeds $250.0 million, the maximum Consolidated Total Net Leverage Ratio may be increased to 4.25 to 1.00 for the four consecutive fiscal quarter period beginning with the quarter in which such acquisition is completed. The Credit Agreement also contains customary events of default including, among others, payment defaults, breaches of representations and warranties, covenant
