| Item 1.01 |
Entry into a Material Definitive Agreement.
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On April 27, 2022, The Toro Company (“TTC”) entered into a term loan credit agreement with Bank of America, N.A., as administrative agent, Wells Fargo
Bank, National Association and U.S. Bank National Association, as co-syndication agents, and certain other lenders party thereto (the “Term Loan Agreement”), providing for an aggregate credit commitment of up to $200 million to TTC pursuant to a
five-year unsecured term loan credit facility (the “Term Loan”). TTC entered into the Term Loan Agreement to refinance certain of its outstanding borrowings incurred in connection with TTC’s acquisition of The Intimidator Group that was completed
on January 13, 2022 and borrowed under its revolving credit facility provided under an amended and restated revolving credit agreement dated as of October 5, 2021, with certain lenders, Bank of America, N.A., as administrative agent, swingline
lender and letter of credit issuer, and Wells Fargo Bank, National Association and U.S. Bank National Association, as co-syndication agents.
At the option of TTC, the Term Loan will bear an interest rate equal to the applicable rate and either (a) a variable interest rate equal to the one-
or three-month secured overnight financing rate as administered by the Federal Reserve Bank of New York, depending on the related interest measurement period (the “Term SOFR”) or (b) a variable interest rate based upon the highest of (i) the
federal funds rate calculated by the Federal Reserve Bank of New York plus 0.50%, (ii) the prime rate announced by Bank of America, N.A., (iii) the Term SOFR plus 1.00% and (iv) 1.00% (the “Base Rate”). The applicable rate is scheduled and
dependent upon the leverage ratio (as measured quarterly and defined as the ratio of (a) total indebtedness to (b) consolidated earnings before interest and taxes plus depreciation and amortization expense) and the debt rating of TTC, each as
identified in the Term Loan Agreement. With respect to loans subject to the Base Rate, interest is payable quarterly in arrears. With respect to loans subject to the Term SOFR, interest is payable either monthly or quarterly depending on the
interest period selected by TTC. Beginning with the last business day in June 2025, TTC will make quarterly amortization payments on the Term Loan equal to 2.5% of the aggregate principal amount of the Term Loan. On the closing of the Term Loan,
TTC elected an interest rate with respect to the Term Loan equal to the applicable rate plus the Term SOFR.
The Term Loan Agreement contains customary covenants regarding TTC and its subsidiaries, including, without limitation: financial covenants, such as
the maintenance of minimum interest coverage and maximum leverage ratios; and negative covenants, which, among other things, limit dividends, disposition of assets, consolidations and mergers, liens and other matters customarily restricted in such
agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Term Loan Agreement also contains customary events of default, including, without limitation: payment defaults, material inaccuracy of
representations and warranties, covenant defaults, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, and change of control.
Wells Fargo Securities, LLC, BofA Securities, Inc. and U.S. Bank National Association served as joint lead arrangers and joint bookrunners for the Term
Loan, for which they each received customary compensation. In addition, the administrative agent, the co-syndication agents and certain of the other lenders and their respective affiliates have in the past performed, and may in the future from time
to time perform, investment banking, financial advisory, lending and/or commercial banking services for TTC and its subsidiaries, for which service they have in the past received, and may in the future receive, customary compensation and
reimbursement of expenses.
The foregoing description of the Term Loan Agreement is a summary of the material terms of the Term Loan Agreement, does not purport to be complete and
is qualified in its entirety by reference to the complete text of the Term Loan Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.