JAKKS Pacific Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
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Item 1.01. Entry into a Material Definitive Agreement.
The Company and certain of its subsidiaries as borrowers and certain of its subsidiaries as guarantors, entered into a Credit Agreement (the “Credit Agreement”), dated as of June 24, 2025 (the “Closing Date”) with BMO Bank N.A. as Administrative Agent, Swing Line Lender and Letter of Credit Issuer, for a $70,000,000 first-lien secured revolving credit loan (the “Credit Facility”). The Credit Facility, which is a cash flow-based loan, replaces the Company’s existing $67,500,000 revolving credit facility maturing in June 2026 with JPMorgan Chase Bank, N.A. which was an asset-based loan (the “Existing Loan”). The new Credit Facility may be used for working capital, capital expenditures and other general corporate purposes ` No indebtedness was outstanding on the Existing Loan.
Amounts outstanding under the Credit Facility will bear interest at either (i) SOFR plus 1.50% - 2.00% (determined by reference to a net leverage pricing grid), or (ii) base rate plus 0.50% - 1.00% (determined by reference to a net leverage pricing grid). The Credit Facility matures in June 2030.
The Credit Agreement contains negative covenants that, subject to certain exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur certain additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates. The Company may not permit the Interest Coverage Ratio, measured at the end of each fiscal quarter of the Company, to be less than 3.00 to 1.00 for such Measurement Period, nor may it permit the Total Net Leverage Ratio, measured at the end of each fiscal quarter of the Company, to exceed 2.00 to 1.00.
The Credit Agreement contains events of default that are customary for a facility of this nature, including (subject in certain cases to grace periods and thresholds) nonpayment of principal, nonpayment of interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to certain other existing indebtedness, bankruptcy or insolvency events, certain judgment defaults and a change of control as specified in the Credit Agreement. If an event of default occurs, the maturity of the amounts owed under the Credit Agreement may be accelerated.
To secure its obligations under the Credit Facility, the Company also entered into a Pledge and Security Agreement dated as of the Closing Date between the Company and certain of its subsidiaries as guarantors and BMO Bank N.A. as Administrative Agent (the “Agent”) for the lenders under the Credit Agreement (the “Security Agreement”). The Security Agreement grants to the Agent, for the benefit of the Secured Parties, a security interest in a substantial amount of the Company’s consolidated assets, including its inventory, accounts receivable, intellectual property and a pledge of the capital stock of various of its subsidiaries.
Capitalized terms used herein and not defined herein have the meanings assigned to them in the Credit Agreement or Security Agreement, as the case may be. The foregoing descriptions of the Credit Agreement and the Security Agreement are qualified in their entireties by reference to the respective agreements attached as exhibits to this Form 8-K and incorporated by reference in this Item 1.01.
Item 1.02. Termination of a Material Definitive Agreement.
On the Closing Date, the Company repaid in full amounts due and terminated the Existing Loan, a $67,500,000 senior secured revolving credit facility with JPMorgan Chase Bank, N.A. dated as of June 2, 2021, which was scheduled to terminate in June 2026.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Form 8-K with respect to the Credit Agreement is incorporated by reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits
| (d) | Exhibits |
| * | Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K under the Securities Act. The Company agrees to furnish supplementally any omitted schedules to the Securities and Exchange Commission upon request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JAKKS PACIFIC, INC. | ||
| Dated: June 25, 2025 | ||
| By: | /s/ JOHN L. KIMBLE | |
| John L. Kimble, | ||
| CFO | ||
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