C.H. Robinson amended its credit agreement to accommodate its planned acquisition of RXO and the related financing. The changes adjust how the acquisition is treated under the company’s loan covenants, while leaving the maximum net leverage ratio at 3.75 to 1.00.
The company also issued its third-quarter results announcement and earnings-call slides on October 28.
Key details
- The amendment was agreed on October 22 by C.H. Robinson, its guarantors, participating lenders and U.S. Bank, which acts as administrative agent.
- It permits the RXO acquisition and related financing under the credit agreement, and classifies the deal as both a “Permitted Acquisition” and a “Material Acquisition.”
- For material acquisitions, the agreement’s pro forma calculation of consolidated EBITDA will be based on the acquired business’s historical financial statements. That treatment will apply to RXO.
- The maximum net leverage ratio remains 3.75 to 1.00, but the amendment removes the cap on how much cash can be netted against debt in that calculation.
- When the RXO acquisition is completed, a leverage holiday will be deemed elected. It will count as one of the two leverage holidays allowed under the agreement.
- The third-quarter results announcement and accompanying earnings-call slides were issued, but the financial results and other details are not included in the material provided here.
Plain-English implications
The amendment changes the credit agreement’s treatment of the RXO transaction and the calculation of leverage, including by allowing uncapped cash netting. The stated leverage ceiling does not change, and completing the acquisition will use one of the agreement’s two permitted leverage holidays.