Aramark enters $3.6 billion multicurrency term loans, revolver

By Marisa Wong

Morgantown, W.Va., March 28 – Aramark subsidiary Aramark Services, Inc. and other Aramark subsidiaries entered into a credit agreement on March 28 with JPMorgan Chase Bank, NA as administrative agent for senior secured credit facilities totaling $3.6 billion, according to an 8-K filing with the Securities and Exchange Commission.

The new facilities consist of a U.S. dollar-denominated term A loan due 2022 to Aramark Services in an amount of $650 million, a Canadian dollar-denominated term A loan due 2022 to Aramark Canada Ltd. in an amount equal to C$133.4 million, a U.S. dollar-denominated term B loan due 2024 to Aramark Services in the amount of $1.75 billion, a yen-denominated term C loan due 2022 to Aramark Services in an amount equal to ¥11,107,000,000 and a revolving credit facility of up to $1 billion with borrowings to Aramark Services and some of its foreign subsidiaries available in U.S. dollars, Canadian dollars, euros and pounds sterling.

The revolver, which matures in 2022, includes capacity for $250 million of letters of credit.

The term loan facilities were funded in full, and $71 million under the revolver was drawn on the closing date.

The company used borrowings under the new facilities, along with proceeds from a recent notes offering, to repay all existing term loans under its existing senior secured credit facility. The existing credit agreement was terminated on the closing date of the new credit agreement.

The prior credit agreement provided for $730 million of revolving commitments maturing in 2019 and term loans, with about $3.29 billion outstanding as of the closing date, maturing over a period ending on 2019 and 2021.

Under the new facility, the borrowers may at any time request incremental commitments of (a) up to $1.4 billion plus (b) the aggregate U.S. dollar equivalent of all voluntary prepayments of term loan facilities and borrowings under the revolvers, other than prepayments funded with long-term debt, plus (c) an unlimited amount, subject to pro forma compliance with a maximum consolidated secured leverage ratio of 3.00 to 1.00.

Borrowings bear interest at Libor (or BA rate for Canadian loans), subject to a 0% Libor (or BA rate) floor, plus an applicable margin based on the company’s consolidated leverage ratio. The applicable margin for term A loans, term C loans and the revolver is initially 175 basis points; the margin for term B loans is initially 200 bps.

The commitment fee is initially 30 bps.

The term loan facilities require the company to prepay outstanding term loans with 50% of annual excess cash flow with step-downs to 25% and 0% upon the company reaching specified consolidated secured leverage ratio thresholds; 100% of cash proceeds of all non-ordinary course asset sales or other dispositions of property; and 100% of cash proceeds of any incurrence of debt.

The company may voluntarily repay outstanding loans at any time without premium or penalty. Voluntary prepayments of the term B loan in connection with any repricing transaction made within six months after the closing date will be at a 1% prepayment premium.

The company is required to repay installments on the loans under the term B facility in quarterly principal amounts of 1% per year. The applicable borrowers are required to repay installments on the loans under the U.S. dollar and Canadian dollar term A facilities and yen term C facility in quarterly principal amounts of 5%, 5%, 7.5%, 10% and 15% per year in the first, second, third, fourth and fifth years after the closing date, respectively.

In addition to restrictive covenants, the credit agreement contains financial covenants, including one requiring the company to maintain a maximum consolidated secured leverage ratio of 5.125 to 1.00.

Aramark provides food, hospitality and facility management services as well as uniform and work apparel. The company is based in Philadelphia.

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