According to an 8K filed with the SEC, Bank of America served as administrative agent on an amendment to WEX’s existing senior secured credit facilities. In addition, WEX agreed to a $400 million dollar investment from an affiliate of Warburg Pincus, which includes convertible notes in an aggregate principal amount of $310 million and $90 million in common stock through a private placement.
The amendment:
- Increases the current maximum consolidated leverage ratio to 5.5x through Dec. 31, 2020 and stepping down thereafter
- Permits an unlimited amount of corporate cash to be netted from the financing debt balance for financial covenant purposes following the closing of the private placement for up to six months following resolution of a transaction with eNett and Optal and permanently increases the amount of cash netting allowed to $250 million if the eNett and Optal transaction does not close or $400 million if it does close
- Adds a fourth pricing tier in the case that leverage exceeds 5.5x at LIBOR plus 3% and introduces a LIBOR floor on revolving credit facility borrowings of 75 basis points
In connection with the credit agreement amendment, WEX also amended and restated the debt commitment letter entered into in connection with the eNett and Optal transaction to reallocate the $1.352 billion of aggregate commitments from a $1.052 billion seven-year term loan B facility and a $300 million senior unsecured bridge facility to a $752 million seven-year term loan B facility and a $600 million senior secured bridge facility. WEX also secured additional financial covenant relief to the consolidated leverage ratio and coverage ratio in the credit agreement amendment in connection with the eNett and Optal transaction. The maximum consolidated leverage ratio increases to 7.5x by year end and stepping down thereafter if the eNett and Optal transaction were to close.
“We are pleased to further fortify our balance sheet during the current uncertain operating environment while reaffirming our relationship with Warburg Pincus, who has demonstrated their strong commitment to the future growth of WEX,” Melissa Smith, chair and CEO of Wex, said. “The combination of this investment and the recent credit agreement amendment put us in an even stronger financial position with additional financial flexibility, improved liquidity and increased cash on hand. This better positions us to remain focused on our long-term strategic initiatives to drive our future success, and capitalize on the economic recovery when market conditions improve.”
“We are honored to once again invest behind the strong management team at WEX to further support its long-term commitment to market leadership, innovation and growth,” Chandler Reedy and Stephanie Geveda, managing directors at Warburg Pincus, said in a joint statement, “Given our deep familiarity and relationship with the company, we are confident WEX has the capabilities and resources to emerge from the current environment stronger than ever.”
WEX is a financial technology service provider.