iTwo Newton Place, i255 Washington Street, iSuite
300, iNewton, iMassachusettsi02458-1634
(Address
of Principal Executive Offices) (Zip Code)
i617-i964-8389
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
i☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
i☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
i☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
i☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
Trading Symbol
Name of each Exchange on which Registered
iCommon
Shares of Beneficial Interest
iSVC
iThe Nasdaq Stock Market LLC
Indicate by check mark whether the
registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company i☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
In
this Current Report on Form 8-K, the terms “we”, “us”, “our” and “the Company” refer to Service Properties Trust unless otherwise noted.
Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On January 13, 2021, we gave notice to our lenders to borrow $972.8 million, which represented the remaining balance of our $1.0 billion revolving credit facility. As of January 13, 2021, the interest rate payable on borrowings under our revolving credit facility was 2.85%.
We
increased the borrowings under our revolving credit facility as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of continued uncertainty in the global markets resulting from the COVID-19 pandemic.As previously disclosed, we expect that the ratio of income available for debt service to debt service coverage could fall below the 1.5x requirement under the Second Amended and Restated Credit Agreement, dated as of May 10, 2018, among the Company, the guarantors and pledgors party thereto, the financial institutions party thereto and Wells Fargo Bank, National Association, as administrative agent, as amended, or our Credit Agreement, and our public debt covenants as of the end of the first quarter of 2021.We
will not be allowed to incur additional debt while this ratio is below 1.5x, and as a result, we borrowed the remaining balance of our revolving credit facility as a precautionary measure.The proceeds from this borrowing may be used for general business purposes permitted by, and subject to the limits set forth in, our Credit Agreement.
The foregoing description of our Credit Agreement is not complete and is subject to and qualified in its entirety by reference to our Credit Agreement, as amended, which was filed as Exhibit 10.7
to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, or Quarterly Report, and is incorporated herein by reference.
Warning Concerning Forward-Looking Statements
This Current Report on Form 8-K contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever we use words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our
present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by our forward-looking statements as a result of various factors. For example:
•We expect the borrowings under our revolving credit facility to strengthen our financial position; however, we may not obtain the financial flexibility we expect due to the ongoing COVID-19 pandemic or for other reasons. We can provide no assurance regarding the duration and severity of the economic downturn resulting from the COVID-19 pandemic and its impact on us and our operators.
•We expect the ratio of income available for debt service to debt service
coverage could fall below the 1.5x requirement under our Credit Agreement and our public debt covenants as of the end of the first quarter of 2021. We will not be allowed to incur additional debt while this ratio is below 1.5x. We cannot be certain how long our income available for debt service would remain below 1.5x.If we cannot incur additional debt, we may be forced to raise additional sources of capital or take other measures to maintain adequate liquidity.
The information contained in our filings with the Securities and Exchange Commission, or SEC, including under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report, identifies other important factors that could cause our actual results to differ materially from those
stated in or implied by our forward-looking statements. Our filings with the SEC are available on the SEC’s website at www.sec.gov.
You should not place undue reliance upon forward-looking statements.
Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
Item 9.01.Financial Statements and Exhibits.
(d)
Exhibits
104
Cover
Page Interactive Data File. (Embedded within the Inline XBRL document.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
