Item 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On October 28, 2019, a subsidiary of Taubman Centers, Inc., The Taubman Realty Group Limited Partnership (TRG), entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement (the Credit Agreement) with JPMorgan Chase Bank, N.A., as Administrative Agent, and the various lenders on the signature pages thereto.
The Credit Agreement amends and restates TRG's existing Amended and Restated Revolving Credit and Term Loan Agreement dated February 1, 2017, as amended, in its entirety. The Credit Agreement extends the maturity date of the revolving facility to February 1, 2024, with two six-month extension options at the option of TRG subject to specified conditions therein. Under the Credit Agreement, the revolving facility bears interest at LIBOR plus a range based on TRG’s total leverage ratio as shown in the table below.
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Ratio Level
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Total Leverage Ratio
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LIBOR Spread
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Facility Fee Rate
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Level I
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< 40%
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1.05%
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0.20%
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Level II
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> 40% and < 45%
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1.15%
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0.20%
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Level III
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> 45% and < 50%
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1.20%
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0.20%
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Level IV
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> 50% and < 55%
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1.375%
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0.225%
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Level V
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>55%
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1.60%
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0.25%
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As of October 28, 2019, the leverage ratio resulted in an interest rate of LIBOR plus 1.375% with a 0.225% facility fee. The Credit Agreement continues to provide for an aggregate commitment of $1.1 billion on the revolving facility, which will be used for general business purposes for TRG.
The Credit Agreement reduces the unsecured term loan to $275 million from $300 million. Payments for the reduction in the unsecured term loan were funded by the revolving facility. In addition, the Credit Agreement extended the maturity date of the unsecured term loan to February 1, 2025 and the loan now bears interest at LIBOR plus a range based on TRG’s total leverage ratio as shown in the table below.
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Ratio Level
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Total Leverage Ratio
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LIBOR Spread
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Level I
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< 40%
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1.15%
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Level II
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> 40% and < 45%
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1.25%
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Level III
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> 45% and < 50%
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1.35%
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Level IV
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> 50% and < 55%
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1.55%
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Level V
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>55%
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1.8%
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As of October 28, 2019, the leverage ratio results in an interest rate of LIBOR plus 1.55%.
Under the Credit Agreement, TRG may request an increase in the lenders' revolving commitments or the establishment of one or more term loans with a maximum aggregate increase of $625 million, bringing the aggregate total commitment under the Credit Agreement to $2.0 billion, subject to obtaining additional lender commitments, customary closing conditions, and covenant compliance for the unencumbered asset pool.
The entities owning Beverly Center, Dolphin Mall and The Gardens on El Paseo remain guarantors under the Credit Agreement and the shopping centers owned by those entities are unencumbered assets. The Credit Agreement also contains various affirmative and negative covenants, including financial covenants, and events of default that are customary for these types of credit instruments.
The foregoing description is qualified in its entirety by the Credit Agreement and the guaranty, copies of which are attached hereto as Exhibits 4.1 and 4.2, respectively, all of which are incorporated herein by reference.