STEWART INFORMATION SERVICES CORP: conclusion of a material definitive agreement, creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a holder, financial statements and supporting documents (Form 8-K)


Item 1.01 Conclusion of a Material Definitive Agreement

Information included or incorporated by reference in Section 2.03 of this current report on Form 8-K (this “Report”) is incorporated by reference in Section 1.01 of this report.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

At 28 October 2021, Stewart Information Services Company (the “Company”), has entered into a senior unsecured credit agreement (the “Credit Agreement”) with
PNC Bank, National Association, as administrative agent, Swingline loan lender and issuing lender, Stewart Securities Company and Stewart Lender Services, as guarantors (the “guarantors”), and the lenders who are parties thereto. Capitalized terms used and not defined in this section 2.03 have the meanings given to them in the Credit Agreement.

The credit facility evidenced by the credit agreement consists of a $ 200 million revolving credit facility that matures on 28 October 2026 and one $ 400 million 364 day deferred drawing term credit facility. The credit agreement includes an additional facility option which allows the Company, subject to the satisfaction of certain conditions, to increase the revolving commitments by a total amount not exceeding $ 125 million. The obligations of the Company under the Credit Agreement are not guaranteed and are guaranteed by the Guarantors. When entering into the Credit Agreement, the Company borrowed $ 370 million under the term credit facility, the proceeds of which were used to repay in full
$ 270 million outstanding obligation under the Company’s senior unsecured credit agreement dated November 9, 2018 with BBVA United States fka Compass Bank, NA
(as amended before the date hereof, the “Existing Credit Agreement”). Other loan proceeds from time to time under the Credit Agreement may be used for general corporate purposes, including financing certain strategic acquisitions.

At the option of the Company, borrowings under the Credit Agreement will bear interest either (a) at the base rate plus the applicable margin (each as defined in the credit agreement) or (b) at the LIBOR rate (as as defined in the credit agreement) plus the Applicable Margin. The applicable margin, based on the debt to capitalization ratio of the Company (as defined in the credit agreement), for revolving loans ranges from 0.25% to 0.625% per annum for base rate loans and from 1 , 25% to 1.625% per annum for loans at the LIBOR rate and for term loans varies from 0.0% to 0.25% per annum for borrowings at the base rate and from 0.875% to 1.25% per annum. year for loans at the LIBOR rate. In addition, a commitment fee accumulates, based on the Company’s debt-to-capitalization ratio, ranging from 0.15% to 0.30% per annum on the average unused daily portion of commitments.

The credit agreement contains customary restrictive covenants including, but not limited to, clauses relating to the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. In addition, the credit agreement contains customary restrictive covenants limiting the ability of the company and the guarantors to, among other things, incur debts, grant liens, make investments, make certain fundamental changes, make certain transfers of assets and make certain restricted payments. The credit agreement also contains certain consolidated financial covenants providing that (a) the debt to total capitalization ratio will not be greater than 0.35 to 1.00 and (b) Net value (as defined in the Credit Agreement) must not be less than the sum of (i) an amount equal to 70% of the Consolidated Accounts of the Company Net value for the closed fiscal quarter June 30, 2021 plus (ii) 50% of the Consolidated Net Income (as defined in the Credit Agreement) for each fiscal quarter (starting with the first full fiscal quarter ending after the closing date) for which the Consolidated Net Income is a positive amount plus (iii) 50% of the net cash proceeds from issuance of shares of the Company after the closing date. In the event of default, lenders can expedite loans. Upon the occurrence of certain insolvency and bankruptcy cases, loans will be automatically accelerated.

Financial institutions parties to the credit agreement and their respective subsidiaries are full-service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, research in investment, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Some of these financial institutions and their respective affiliates were parties to the existing credit agreement and / or have provided, and may in the future, provide a variety of these services to the Company and to persons and entities having dealings with the Company. Company, for which they have received or will receive the usual fees and expenses.

The Credit Agreement replaces the Existing Credit Agreement, which was terminated on 28 October 2021 within the framework of the conclusion of the Credit Agreement by the Company.

The above summary of the material terms of the Credit Agreement and the transactions contemplated by it is qualified in its entirety by the Full Text of the Credit Agreement, which is attached as Exhibit 10.1 to this current report. on Form 8-K, and this exhibit is incorporated here by reference.

Item 9.01 Financial statements and supporting documents.

(d) Exhibits.

The following documents are attached:

No.        Description
  10.1       Credit Agreement, dated as of October 28, 2021 among the Company, PNC
           Bank, as Administrative Agent, Swingline Loan Lender and Issuing Lender,
           the Guarantors, and Lenders party thereto.

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