Item 1.01. Entry into a Material Definitive Agreement.
On June 1, 2021, WESCO Distribution, Inc., a Delaware corporation (“WESCO Distribution”), amended its receivables facility (the “Receivables Facility”) pursuant to the terms and conditions of a Third Amendment to the Fifth Amended and Restated Receivables Purchase Agreement, dated as of June 1, 2021 (the “Receivables Amendment”), by and among WESCO Receivables Corp. (“WESCO Receivables”), WESCO Distribution, the various purchaser groups from time to time party thereto and PNC Bank, National Association, as Administrator. The Receivables Amendment amends the amended and restated receivables purchase agreement entered into on June 22, 2020 (as amended, the “Receivables Purchase Agreement”). The Receivables Amendment, among other things, increases the purchase limit under the Receivables Purchase Agreement from $1,200 million to $1,300 million, extends the maturity date from June 22, 2023 to June 21, 2024, decreases the LIBOR floor from 0.50% to 0.00% and decreases the interest rate spread from 1.20% to 1.15%. The commitment fee of the Receivables Facility remains unchanged.
The Company expects to utilize cash and availability under the Receivables Facility and its separate revolving credit facility to finance the redemption of all of WESCO Distribution’s outstanding 5.375% Senior Notes due 2024 (the “Notes”) discussed below under Item 8.01 of this Current Report on Form 8-K.
As a result of the redemption of the Notes and amendment to the Receivable Facility, total interest expense is expected to be reduced by approximately $2 million in 2021 and $18 million per year thereafter based on current interest rates. Following the redemption of the Notes, WESCO International, Inc. expects liquidity to remain above $800 million.