On April 13, 2018, Adtalem Global Education Inc. (“Adtalem”) entered into a  Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent (“Agent”), swingline lender and letter of credit issuer; Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of Montreal, Fifth Third Bank and PNC Capital Markets LLC, as joint lead arrangers and joint bookrunners; PNC Bank, National Association, Bank of Montreal and Fifth Third Bank, as co-syndication agents; The Northern Trust Company, as documentation agent; and other lenders party thereto.  The Credit Agreement replaces Adtalem’s prior $400 million Credit Agreement (the “Prior Credit Agreement”), dated March 31, 2015.  Proceeds from borrowings under the Credit Agreement will be used to finance working capital and capital expenditures, to support the issuance of standby letters of credit, to make restricted payments, to make permitted acquisitions, and for other general corporate purposes.

The Credit Agreement provides for (a) a five-year multi-currency revolving credit facility in the amount of $300 million (the “Aggregate Revolving Commitment”) with up to $200 million available in currencies other than United States Dollars and up to $100 million available for letters of credit to Adtalem and certain designated subsidiary borrowers (together with Adtalem, collectively,  the “Borrowers”) and (b) a seven-year Term B loan facility in the amount of $300 million.  Subject to certain conditions set forth in the Credit Agreement, Adtalem may elect to increase the Aggregate Revolving Commitment and/or request additional term loans in an aggregate amount up to $250 million.  

Adtalem may select interest rates for borrowings under the Aggregate Revolving Commitment equal to (a) LIBOR or a LIBOR-equivalent rate for eurocurrency rate loans or a base rate, plus (b) an applicable rate based on the consolidated leverage ratio (as defined in the Credit Agreement) of Adtalem and its subsidiaries.   The applicable rate ranges from 1.75% to 2.75% for LIBOR rate loans, and from 0.75% to 1.75% for base rate loans.  Adtalem will incur a commitment fee with respect to the unused portion of the Aggregate Revolving Commitment at an applicable rate based on the consolidated leverage ratio ranging from 0.35% to 0.45%.  Adtalem may select interest rates applicable to the Term B loans equal to (a) LIBOR or a LIBOR-equivalent rate for eurocurrency rate loans plus 3.00% or (b) a base rate plus 2.00%.

 

The Credit Agreement contains customary affirmative, negative and financial covenants, representations, warranties, events of default and remedies upon default including acceleration, and borrowing conditions.  After the end of each of Adtalem’s fiscal years commencing with the fiscal year ending June 30, 2019, Adtalem is required to prepay the Term B loans in amount equal to 50% of consolidated excess cash flow (as defined in the Credit Agreement) for such fiscal year unless the consolidated leverage ratio is less than or equal to 1.75 to 1.00.  Adtalem and certain of its subsidiaries guaranteed the obligations of the Borrowers and have pledged the equity interests of certain of their respective subsidiaries.  Adtalem and certain of its U.S. subsidiaries have granted a security interest in favor of Agent in all of their property (other than real estate and other certain excluded property) to secure the payment and performance of the obligations under the Credit Agreement. Full details of the Credit Agreement are contained in the agreement included as Exhibit 10.1 to this Form 8-K.  Currently, a letter of credit with an original face amount of $68,435,908 and $300 million of term loans are outstanding under the Credit Agreement.