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Item 1.01
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Entry into a Material Definitive Agreement
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On May 22, 2019, Service Corporation International (the “Company”) entered into a new senior unsecured credit agreement with JPMorgan Chase
Bank, N.A., as administrative agent, and certain other financial institutions, as lenders, providing for a $650 million senior term loan facility, maturing in May 2024 (the “Term Loan A”), and a revolving credit facility providing for
borrowings of up to $1 billion, with commitments expiring and loans maturing in May 2024 (the “Revolving Facility” and, together with the Term Loan A, the “Credit Agreement”).
All of the indebtedness outstanding under the Credit Agreement is guaranteed by the Company’s current and future domestic subsidiaries (other than
certain excluded subsidiaries).
The loans under the Credit Agreement will bear interest per annum, at the Company’s election, equal to:
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An alternate base rate plus the applicable margin for such loans. The alternate base rate is the highest of
(a) the Federal Funds Effective Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by JPMorgan Chase Bank, N.A as its “prime rate,” and (c) the adjusted LIBOR rate for a
one-month
interest period beginning on such day plus 1.00%; or
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the LIBOR rate for the selected interest period plus the applicable margin for such loans.
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The applicable margin ranges from 1.75% to 1.00% for borrowings based on the LIBOR Rate and .75% to 0.00% for borrowings based on the alternate base rate
depending on the Company’s leverage ratio.
Customary fees are payable in respect of the Credit Agreement, including letter of credit fees and
commitment fees.
The Credit Agreement includes a number of negative covenants that, among other things, limit or restrict the ability of the Company and
its other subsidiaries (including the guarantors) to, subject to certain exceptions, incur additional indebtedness (including guarantees), grant liens, make investments, make dividends or distributions with respect to the Company’s capital
stock, make prepayments on other indebtedness, engage in mergers or change the nature of the business of the Company or its other subsidiaries (including the guarantors). In addition, the Company is required to comply with a leverage ratio of 4.75
to 1.00 (with a step up to 5.25 to 1.00 for the three consecutive fiscal quarters ended immediately following the consummation of a qualified acquisition) and an interest coverage ratio of 3.00 to 1.00 as of the end of any fiscal quarter.
The Credit Agreement also contains certain affirmative covenants, including financial and other reporting requirements, applicable to the Company and its
other subsidiaries (including the guarantors).
A copy of the Credit Agreement is attached as Exhibit 10.1 and is incorporated herein by reference.