Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On March 26, 2020, Spire Inc. (“Spire”), as Borrower, entered into a new loan agreement (“Loan Agreement”) with the lenders party thereto, as Banks, including U.S. Bank National Association, as the Administrative Agent, and TD Bank, N.A., as Documentation Agent. Spire and its affiliates have or may have customary banking relationships with one or more of these lenders for the provision of a variety of financial services, including commercial paper dealer, pension fund trustee, cash management, investment banking, and lockbox services, none of which are material individually or in the aggregate with respect to any individual party.
The Loan Agreement provides for a term loan of $150 million, which was fully funded on March 26, 2020, and which matures on March 25, 2021, subject to optional prepayment by Spire. Borrowings under the Loan Agreement bear interest at a rate determined by reference to the LIBOR Rate or the Base Rate (both terms as defined in the Loan Agreement), at Spire's option, plus 0.85% per annum in the case of LIBOR Rate Loans and 0.0% per annum in the case of Base Rate Loans.
The Loan Agreement contains customary affirmative and negative covenants, including, among other things, limitations on liens, acquisitions, investments, transactions with affiliates, changes in nature of business, sales of property and use of loan proceeds. The Loan Agreement also contains a financial covenant limiting Spire's consolidated debt to 70% of its consolidated capitalization at the end of each fiscal quarter. The calculation is more specifically described in the Loan Agreement. The Loan Agreement also contains customary events of default, including, without limitation, payment defaults, material inaccuracy of representations and warranties, certain events of bankruptcy and insolvency, cross defaults to certain other agreements, and the entry of certain judgments that are not timely appealed or satisfied. If an event of default occurs under the Loan Agreement, the Administrative Agent may, with the consent of the required lenders, or shall, upon the request of the required lenders, (i) terminate the lenders' commitments under the Loan Agreement, (ii) declare any outstanding loans under the Loan Agreement to be immediately due and payable, and (iii) exercise all other rights and remedies available under the transaction documents or applicable law.
Spire expects to use amounts borrowed under the Loan Agreement for working capital and general corporate purposes.
The foregoing summary of the Loan Agreement is not complete and is qualified in its entirety by reference to the full text of the Loan Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.