Item 1.01. Entry into a Material Definitive Agreement.
On November 1, 2021, The Interpublic Group of Companies, Inc. (the “Company”) entered into an amendment and restatement (the “Amendment”) of the Company’s credit agreement originally dated as of July 18, 2008 (as amended and restated as of November 1, 2019, as further amended prior to November 1, 2021, and as amended and restated pursuant to the Amendment, the “Credit Agreement”), by and among the Company, the initial lenders named therein, Citibank, N.A. (“Citibank”), as administrative agent; Bank of America, N.A. and JPMorgan Chase Bank, N.A. (“JPMorgan”), as co-syndication agents; Morgan Stanley MUFG Loan Partners, LLC, acting through Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”) and MUFG Bank, Ltd. (“MUFG”), as documentation agent; and Citibank, JPMorgan, BofA Securities, Inc. and Morgan Stanley MUFG Loan Partners, LLC, acting through Morgan Stanley and MUFG, as joint lead arrangers and joint book managers. Under the Amendment, among other things, the maturity date of the Credit Agreement was extended to November 1, 2026. The revolving commitments under the Credit Agreement remain unchanged at $1.5 billion, and the Company continues to have the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250 million, provided the Company receives commitments for such increases and satisfies certain other conditions.
Pursuant to the Amendment, the cost structure has changed. Based on the Company’s current credit ratings, the applicable margin for Base Rate borrowings is 0.125%, for EURIBOR and SONIA borrowings is 1.125%, and for Term SOFR borrowing is 1.225% (each of Base Rate, EURIBOR, SONIA and Term SOFR as defined in the Credit Agreement), and the facility fee payable on a lender’s revolving commitment is 0.125%.
The Amendment continues to include a required leverage ratio, among other customary covenants. Under the Credit Agreement, the Company is required to maintain, as of the end of each fiscal quarter, a leverage ratio of not more than 3.50 to 1.00. At the election of the Company, the leverage ratio may be changed to not more than 4.00 to 1.00 for four consecutive fiscal quarters, beginning with the fiscal quarter in which there is an occurrence of one or more acquisitions with an aggregate purchase price of at least $200 million.
Pursuant to the Amendment, the event of default triggers for cross defaults, judgement defaults and change of control remain the same.
The foregoing description is qualified in its entirety by reference to the Credit Agreement, attached hereto as Exhibit 10.1, which is incorporated herein by reference.