| Item 1.01. |
Entry into a Material Definitive Agreement.
|
On November 18, 2021, Allegion plc (the “Company”) entered into a new
Credit Agreement (the “Credit Agreement”) by and among
the Company and Allegion US Holding Company Inc. (“Allegion US Holding” and
together with the Company, the “Borrowers”), as Borrowers, the
lenders and issuing banks party thereto, and Bank of America, N.A.,
as administrative agent. The Credit Agreement refinanced in full
the Company’s and Allegion US Holding’s existing Credit Agreement,
dated as of September 12, 2017 (the “Existing Credit Agreement”),
among the Company, Allegion US Holding, the lenders and issuing
banks party thereto, and JPMorgan Chase Bank, N.A., as
administrative agent. The Credit Agreement provides for
$750 million in unsecured financing, consisting of a term loan
facility (the “Term
Facility”) and a revolving credit facility (the
“Revolving Facility”
and, together with the Term Facility, the “Facilities”).
The Term Facility consists of a five-year term loan facility in an
aggregate principal amount of $250 million. The full amount of
the Term Facility was made in a single draw on November 18,
2021, and amounts borrowed under the Term Facility that are repaid
or prepaid may not be reborrowed. The Term Facility will amortize
in quarterly installments at the following rates per annum: 5% in
year one; 5% in year two; 5% in year three and 10% in year four and
thereafter, with the balance due on the date that is five years
from the closing date.
The Revolving Facility consists of a five-year revolving credit
facility with aggregate commitments in an amount equal to
$500 million, of which up to $100 million is available
for the issuance of letters of credit, and including a swingline
facility in an amount equal to $50 million. Certain of the
commitments under the Revolver are available to be drawn in
currencies other than US dollars, including euros and pounds
sterling. The Revolver will mature and the commitments thereunder
will terminate on the date that is five years after the closing
date. Amounts repaid under the Revolver may be reborrowed.
The indebtedness, obligations and liabilities under the Facilities
are unconditionally guaranteed jointly and severally on an
unsecured basis by the Company and Allegion US Holding and are
unsecured.
Prior to maturity, the Borrowers are only required to prepay the
Revolving Facility in the event that the loans outstanding under
the Revolving Facility (inclusive of any letters of credit issued)
exceed the relevant commitments thereof. The Borrowers are not
required to prepay the Term Facility at any point prior to
maturity. The Borrowers may voluntarily prepay outstanding loans
under the Facilities in whole or in part at any time without
premium or penalty, subject to payment of customary breakage costs
in the case of BSBY rate loans. Voluntary prepayments of the Term
Facility will be applied to the remaining installments thereof at
the direction of the Borrowers while voluntary prepayments of the
Revolving Facility will be applied ratably among the lenders
thereof. Commitments under the Revolving Facility may be reduced in
whole or in part at any time without premium or penalty.
The Facilities contain negative and affirmative covenants and
events of default customary for credit facilities of this type.
Outstanding borrowings under the Facilities will accrue interest,
at the option of the Borrowers, at a per annum rate of (i) a
BSBY rate plus the applicable spread or (ii) a base rate plus
the applicable spread. The applicable margin for borrowings under
the Facilities is subject to a ratings-based pricing grid with the
BSBY rate ranging from 0.875% to 1.375%, depending on the
Borrowers’ credit ratings. During an event of default, overdue
principal under the Facilities may bear interest at a rate 2.00% in
excess of the otherwise applicable rate of interest.
The Borrower will pay certain fees with respect to the Facilities,
including an unused commitment fee on the undrawn portion of the
Revolving Facility of between 0.090% and 0.200%, depending on
Borrowers’ credit rating, as well as certain other fees.
The summary is qualified in its entirety by reference to the Credit
Agreement filed as Exhibit 10.1 to this Current Report on
Form 8-K, which
is incorporated herein by reference.
