Item 1.01 Entry into a Material Definitive Agreement.
Term Credit Agreement
On November 19, 2021, Ecolab Inc., a Delaware corporation (“Ecolab”), as borrower, entered into a term credit agreement (the “Credit Agreement”) with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $3.0 billion unsecured committed delayed draw term loan credit facility. Under the terms of the Credit Agreement, Ecolab may only use the proceeds of loans under the Credit Agreement to (a) pay a portion of the consideration for the previously announced acquisition of the shares of the subsidiaries and certain other affiliated entities of Purolite Corporation, a Delaware corporation (“Purolite”), and substantially all of Purolite’s assets used or held for use in connection with its filtration and purification resins business, pursuant to the Purchase Agreement, dated October 28, 2021, by and among Ecolab, Purolite, Stefan E. Brodie and Don B. Brodie, and Stefan E. Brodie, solely in his capacity as the representative of the sellers, and (b) to pay fees, costs and expenses incurred in connection with such acquisition and the transactions contemplated by the Credit Agreement.
Rates for borrowing under the Credit Agreement are dependent on Ecolab’s credit ratings and are based, at Ecolab’s election, upon whether the borrowing is a Term SOFR Loan, Daily Simple SOFR Loan or a Base Rate Loan, each as defined in the Credit Agreement. Term SOFR Loans will bear interest at an adjusted forward-looking term rate based on the secured overnight financing rate (“SOFR”) as administered by CME Group Benchmark Administration Limited plus 0.10% plus an applicable margin ranging from 0.75% to 0.875%, depending on Ecolab’s credit ratings. Daily Simple SOFR Loans will bear interest at an adjusted backward-looking rate based on SOFR as administered by the Federal Reserve Bank of New York plus 0.10% plus an applicable margin ranging from 0.75% to 0.875%, depending on Ecolab’s credit ratings. Base Rate Loans will bear interest at a rate per annum equal to the greatest of (a) the prime rate, (b) the New York Federal Reserve Bank rate plus 1/2 of 1%, and (c) an adjusted term SOFR rate for a one-month interest period plus 1%. In addition, under the terms of the Credit Agreement, Ecolab agreed to pay the lenders a ticking fee during the Ticking Fee Accrual Period, as defined in the Credit Agreement. The ticking fee rate is either 0.06% or 0.08%, depending on Ecolab’s credit ratings.
The Credit Agreement contains a financial covenant that requires Ecolab to maintain a minimum interest expense coverage ratio, measured as of the end of each four-quarter period. The Credit Agreement also contains customary conditions to funding, events of default, affirmative covenants and negative covenants, including restrictions on liens and subsidiary indebtedness.
In the ordinary course of their respective businesses, one or more of the lenders under the Credit Agreement, or their affiliates, have or may have various relationships with Ecolab and its subsidiaries involving the provision of financial services, including cash management, investment banking and trust services, for which they received, or will receive, customary fees and expenses.
The foregoing description is not intended to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is incorporated herein by reference and attached as Exhibit 10.1 hereto.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.
