AARON’S COMPANY, INC. : entering into a material definitive agreement, completing the acquisition or disposal of assets, creating a direct financial obligation or an obligation under an off-balance sheet arrangement of a registrant, financial statements and parts (Form 8-K )

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Section 1.01 Entering into a Material Definitive Agreement.

credit agreement

At April 1, 2022Aaron’s Company, Inc.a Georgia corporation (the “Company”), entered into a new unsecured credit facility (the “Credit Facility”) between the Company, Aaron’s, LLC, a wholly owned subsidiary of the Company (“Borrower”), financial institutions from time to time party thereto, as lenders, and Truist Bankas an administrative agent, replacing his
$250 million unsecured credit facility dated November 9, 2020 (as amended, the “Existing Credit Facility”). The credit facility provides for a $175 million
unsecured term loan facility (the “Term Loan”) and a $375 million unsecured revolving credit facility (the “Revolving Facility”), which includes (i) a
$35 million sub-limit for the issuance of letters of credit on customary terms, and (ii) a $35 million sub-limit for swing line loans on usual terms.

Product use

At April 1, 2022the borrower (i) has fully refinanced all outstanding obligations under the existing credit facility and (ii) has incurred the $175 million term loan and $117 million indebtedness under the Revolving Facility to fund the Acquisition Purchase Price (as defined in Section 2.01 of this Current Report on Form 8-K) and other customary closing costs and adjustments related to acquisition and financing. The Company expects that additional borrowings under the Revolving Facility will be used for working capital and capital expenditures, to fund future permitted acquisitions and for other general corporate purposes.

Additional facilities

The Borrower shall have the right from time to time to request to increase the covenants under the Revolving Facility or to increase any existing Term Loan or to establish one or more new additional Term Loans (the “Additional Facilities”) ). The aggregate principal amount of all such additional facilities cannot exceed the greater of the following amounts: $300 million or 1.0x the Company’s consolidated EBITDA (as defined in the Credit Facility) for the last four completed fiscal quarters.

Interest rate

Borrowings under the Revolving Credit Facility and the Term Loan bear interest at an annual rate equal, at the borrower’s option, to (i) the forward-looking forward rate based on the guaranteed overnight rate (” SOFR”) plus an applicable margin of between 1.50% and 2.25%, based on the Company’s total net debt to EBITDA ratio (as defined in the credit facility), or (ii) the rate of plus an applicable margin, 1.00% lower than the applicable margin for SOFR loans.

Maturity and amortization

Loans and commitments under the Revolving Facility mature or terminate on
April 1, 2027.

The term loan is amortized in quarterly installments, beginning on December 31, 2022in an aggregate annual amount equal to (i) 2.50% of the initial principal amount of the Term Loan during the first and second years following the closing date, (ii) 5.00% of the initial principal amount of the Term Loan in the third, fourth and fifth years after the Closing Date, with the remaining principal balance of the Term Loan due and payable in full on April 1, 2027.

Warranties

The Borrower’s obligations under the Credit Facility are jointly and severally guaranteed by the Company and certain of its existing and future direct and indirect commitments. we subsidiaries, subject to the usual exclusions for legal subsidiaries and immaterial subsidiaries.

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Springing Security

Obligations under the Credit Facility are currently unsecured. In the event that the total net debt to EBITDA ratio exceeds 1.50 to 1.00 at the end of any period of four consecutive fiscal quarters (a “Credit Facility Triggering Event”), the Borrower , the company and the other guarantors will be required to provide an enforceable first lien on substantially all of their respective assets, excluding certain customary excluded assets. If a Credit Facility Trigger Event occurs, the liens securing the obligations under the Credit Facility will be equal to the liens securing the obligations under the Franchise Facility (as defined below).

Certain covenants and events of default

The credit facility contains customary financial covenants, including (a) a maximum total net debt to EBITDA ratio of 2.75 to 1.00 and (b) a minimum fixed charge coverage ratio (as defined in the credit facility) from 1.75 to 1.00. Subject to the terms and conditions of the Credit Facility, upon the occurrence of a Qualifying Acquisition (as defined in the Credit Facility), (a) the Total Net Debt to EBITDA ratio may be temporarily increased at 3:00 a.m. to 1:00 a.m. for a period of four fiscal quarters and (b) the ratio of total net debt to EBITDA, with respect to a trigger event on the credit facility, may be temporarily increased to 2 :00 to 1:00 for a period of three fiscal quarters and 1.75 to 1:00 for a fiscal quarter thereafter, in each case, beginning with the fiscal quarter in which such qualifying acquisition takes place.

In addition, the Credit Facility contains a number of customary negative
covenants that, among other matters and subject to certain exceptions, will
restrict the Company's ability and the ability of its restricted subsidiaries
to:

  •   incur additional indebtedness;



  •   pay dividends and other distributions;



  •   make investments, loans and advances;



  •   engage in transactions with affiliates;



  •   sell assets or otherwise dispose of property or assets;



  •   alter the business conducted;



  •   conduct mergers and engage in other fundamental changes;



  •   prepay, redeem or repurchase certain debt; and



  •   grant liens.

The Credit Facility also contains certain customary representations and warranties, covenants and default provisions.

The foregoing description of the Credit Facility does not purport to be complete and is qualified in its entirety by the full text of the Credit Facility, a copy of which is filed as Schedule 10.1 hereto and is incorporated herein by reference. .

loan facility agreement

At April 1, 2022the Company entered into a new $12.5 million unsecured franchise loan facility (the “Franchise Facility”), between the Company, the Borrower, the financial institutions which are parties thereto from time to time, as participants, and
Truist Bankas a repairer, who replaces his $25 million unsecured franchise loan facility dated November 17, 2020.

The Franchise Facility functions as a security by the Borrower, the Company and certain of its existing and future direct and indirect customers. we subsidiaries of certain debt securities of some of the Company’s sale and lease-ownership franchisees under a franchisee loan program. In the event such franchisees are unable to meet their debt service payments or otherwise suffer an event of default, the Company, the Borrower and the other guarantors shall be unconditionally liable for the outstanding balance of the franchisees’ debts in under the franchisee loan program, which would be due in full within 90 days of such event of default.

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Interest Rate
. . .


Item 2.01 Completion of Acquisition or Disposal of Assets.

At April 1, 2022the Company, through its wholly owned subsidiary, Aaron’s
Retail Solutions, LLCa Georgia limited liability company, has completed the previously announced acquisition (the “Acquisition”) of all of the issued and outstanding shares of the capital stock of Interbond Corporation of Americaa
Florida company (“Interbond”) pursuant to the share purchase agreement (as may be amended, modified or supplemented from time to time, the “Agreement”) with Interbond Enterprises, Inc.a Florida society, Michael Perlman, individually and in its capacity as Sellers’ Representative, and the other parties. Interbond, doing business as BrandsMart USAis a leading home appliance and consumer electronics retailer in the Southeastern United States

The agreement is further described in item 1.01 of the company’s current report on Form 8-K filed with the US Securities and Exchange Commission (the “SEC”) on February 24, 2022section 1.01 of which is incorporated herein by reference.

The Company financed the total cash purchase price of approximately
$230 million paid in connection with the acquisition with the proceeds of the credit facility.

At April 1, 2022, the Company has issued a press release announcing the completion of the Acquisition. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a

Off-balance sheet arrangement of a registrant.

The information under Section 1.01 is incorporated herein by reference.

Item 9.01 Financial statements and supporting documents.

(a) Financial statements of acquired businesses.

The financial statements required by this Item 9.01(a) of Form 8-K shall be filed by amendment to this current report on Form 8-K no later than 71 calendar days after the date on which such current report on Form 8-K is due. be filed.

(b) Pro forma financial information.

The financial information required by this Item 9.01(b) of Form 8-K shall be filed by amendment to this current report on Form 8-K no later than 71 calendar days after the date on which such current report on Form 8-K is due. be filed.

(d) Exhibits.

Exhibit
  No.                                    Description

 2.1          Stock Purchase Agreement, dated as of February 23, 2022, by and
            among Aaron's Retail Solutions, LLC, Interbond Enterprises, Inc., the
            Sellers named therein and Michael Perlman, in his capacity as the
            Sellers' Representative thereunder (incorporated by reference to
            Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the
            SEC on February 23, 2022).*

10.1          Credit Agreement, dated as of April 1, 2022, among Aaron's, LLC, as
            the borrower, The Aaron's Company, Inc., the several banks and other
            financial institutions from time to time party thereto and Truist
            Bank, in its capacity as administrative agent.*

10.2          Loan Facility Agreement and Guaranty, dated as of April 1, 2022,
            among Aaron's, LLC, as the sponsor, The Aaron's Company, Inc., the
            several banks and other financial institutions from time to time party
            thereto and Truist Bank, in its capacity as servicer.*

99.1          Press release dated April 1, 2022

104         Cover Page Interactive Data File (embedded within the Inline XBRL
            document).



*   Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5)
    of Regulation S-K. The Company agrees to furnish supplementally to the SEC a
    copy of any omitted schedule or exhibit upon request.


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