Item 1.01
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Entry into a Material Definitive Agreement.
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Refinancing Transactions
Overview
On February 14, 2020, APX Group, Inc. (the Issuer or the Borrower), an indirect, wholly owned subsidiary of Vivint
Smart Home, Inc. (the Company or Vivint), issued $600.0 million aggregate principal amount of 6.75% Senior Secured Notes due 2027 (the Notes), pursuant to an indenture, dated as of
February 14, 2020 (the Indenture), among the Issuer, the guarantors party thereto (the Guarantors) and Wilmington Trust, National Association, as trustee (the Trustee) and collateral
agent.
Concurrently with the Notes offering, the Issuer amended and restated the credit agreements governing its existing revolving credit facility and
existing term loan facility (the Concurrent Refinancing Transactions). In connection therewith, the Issuer, among other things, (i) extended the maturity date with respect to certain commitments under the revolving credit
facility and increased the aggregate commitments in respect of the revolving credit facility to $350.0 million and (ii) incurred $950.0 million aggregate principal amount of term loans.
Vivint used the net proceeds from the Notes offering and Concurrent Refinancing Transactions, together with the proceeds from its previously announced merger
with Mosaic Acquisition Corp. completed on January 17, 2020, to (i) redeem all of the Issuers outstanding 8.750% Senior Notes due 2020 (the 2020 Notes Redemption), (ii) redeem all of the Issuers
outstanding 8.875% Senior Secured Notes due 2022 (the 2022 Private Placement Notes Redemption), (iii) refinance in full the existing borrowings under the Issuers existing term loan facility and revolving credit
facility, (iv) redeem $223.0 million aggregate principal amount of the Issuers outstanding 7.875% Senior Secured Notes due 2022 (the Existing 7.875% Notes Redemption and, together with the 2020 Notes Redemption and the
2022 Private Placement Notes Redemption, the Redemptions) and (v) pay the related accrued interest, fees and expenses related thereto. The Issuer irrevocably deposited funds with the applicable trustee and/or paying agent to
effect the Redemptions and to satisfy and discharge all of the Issuers remaining obligations under the indenture governing the Issuers 8.750% Senior Notes due 2020 and the note purchase agreement governing the Issuers 8.875% Senior
Secured Notes due 2022. Vivint intends to use any remaining net proceeds for general corporate purposes, which may include repayment of additional indebtedness.
Senior Secured Notes due 2027
The following is a brief
description of the terms of the Notes and the Indenture. Capitalized terms used herein, but not defined herein, will have the meanings given to them in the Indenture.
Interest on the Notes will be payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2020.
Interest on the Notes will accrue from and including February 14, 2020. The Notes will mature on February 15, 2027, or on such earlier date as a result of the operation of certain springing maturity date provisions set forth in the
Indenture.
Ranking
The Notes and the
guarantees thereof are the Issuers and the Guarantors senior secured obligations and rank:
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equally in right of payment with all of the Issuers and the Guarantors existing and future senior
obligations (without giving effect to security interests); and
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senior in right of payment to any of the Issuers and the Guarantors obligations that are expressly
subordinated in right of payment to the Notes.
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The Notes and the guarantees thereof will be effectively senior to any future
indebtedness of the Issuer that is unsecured or secured by Liens on Collateral that are junior to the Liens securing the Notes, in each case, to the extent of the value of the Collateral (after giving effect to Liens securing the Priority Payment
Lien Obligations and any other Lien on the Collateral). The Notes and the guarantees thereof will be structurally subordinated to all existing and future liabilities (including trade payables) of the Issuers subsidiaries that do not guarantee
the Notes.
Guarantees and Collateral
The
Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis, by APX Group Holdings, Inc., the direct parent of the Issuer and the direct, wholly owned subsidiary of the Company (Holdings), and
each of the Issuers existing restricted subsidiaries that guarantee indebtedness under the Issuers revolving credit facility, term loan facility and the Issuers existing senior secured notes and senior unsecured notes. The
Issuers existing and future foreign subsidiaries are not expected to guarantee the Notes. These guarantees are subject to release under specified circumstances.
The Notes are secured, on a pari passu basis, by the collateral securing obligations under the Issuers existing senior secured notes, the revolving
credit facility and term loan facility, in each case, subject to certain exceptions and permitted liens. Under the terms of the security documents and the intercreditor agreement, the proceeds of any collection, sale, disposition or other
realization of collateral received in connection with the exercise of remedies
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