Cricut, Inc. entered into a credit agreement Oct. 22 with the other loan parties, the lenders party to the agreement and BMO Bank as administrative agent. The agreement replaces Cricut’s prior credit agreement, dated Aug. 4, 2022, under which JPMorgan Chase Bank served as administrative agent.
The credit agreement provides for a five-year, senior secured, multicurrency revolving credit facility with aggregate commitments of $300 million. The facility matures Oct. 22, 2031.
Subject to the satisfaction of customary conditions, Cricut may use the facility for working capital needs and general corporate purposes, including permitted acquisitions and share repurchases. The facility includes a $35 million letter-of-credit sublimit and a $30 million foreign-currency sublimit. Cricut may borrow, repay and reborrow revolving loans during the availability period and may prepay borrowings at any time without premium or penalty, subject to customary breakage costs.
Cricut also may request incremental revolving commitments and/or incremental term loans in a minimum amount of $25 million, subject to customary conditions and the applicable consent rights. The aggregate amount of the incremental facilities may not exceed the greater of $225 million and 1.5 times consolidated EBITDA, as defined in the credit agreement.
Borrowings under the facility bear interest, at Cricut’s option, at either 1) the Adjusted Term SOFR Rate or another applicable term benchmark or risk-free rate, as applicable, plus an applicable margin ranging from 1.125% to 2.00%, or 2) the Alternate Base Rate plus an applicable margin ranging from 0.125% to 1.00%. In each case, the margin is based on Cricut’s net leverage ratio, as defined in the credit agreement. Cricut is required to pay a commitment fee on undrawn revolving commitments at a rate ranging from 0.125% to 0.225%, based on its net leverage ratio. The applicable benchmark rate floors are 0.00%.
The obligations under the facility are guaranteed by Cricut’s loan-party subsidiaries and are secured by substantially all of the assets of Cricut and the loan-party subsidiaries, subject to customary exceptions.
The credit agreement contains customary affirmative and negative covenants, including limitations on indebtedness, liens, fundamental changes, investments, asset sales, restricted payments and affiliate transactions. It also requires Cricut to maintain a maximum net leverage ratio of 3.00 to 1.00 and a minimum interest coverage ratio of 3.00 to 1.00. Following a permitted acquisition for which the aggregate consideration exceeds $75 million, Cricut may elect to increase the maximum net leverage ratio to 3.50 to 1.00 for four consecutive fiscal quarters, subject to the terms of the credit agreement. The agreement permits Cricut to pay dividends and repurchase shares without specific dollar limitation, subject to the absence of a default and compliance with a maximum net leverage ratio of 2.5 to 1.00, on a pro forma basis.
The credit agreement contains customary events of default, including payment defaults, covenant defaults, cross-defaults to certain material indebtedness, bankruptcy and insolvency events, material judgment defaults and change of control events. Upon the occurrence and during the continuance of an event of default, the administrative agent may, or at the request of the required lenders shall, terminate the commitments, accelerate the outstanding obligations and exercise other customary remedies, subject to the terms of the credit agreement.
In connection with entering into the credit agreement, Cricut terminated the prior credit agreement Oct. 22. As of the termination date, no principal amount was outstanding under the prior agreement. The liens securing the obligations under the prior agreement were released in accordance with the payoff letter and related release documents. No material early termination penalties were incurred in connection with the termination.
