XML 27 R15.htm IDEA: XBRL DOCUMENT v3.24.3
Debt
9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt Debt
The Company's debt obligations consisted of the following (in thousands):

As of September 30,As of December 31,
20242023
Insurance premium financing$— $3,300 
Revolving credit facility$81,000 $— 
Convertible notes$24,460 $— 
Total debt105,460 3,300 
Less: current maturities(1)
— (3,300)
Long-term portion$105,460 $— 

(1) Current maturities of debt are recorded within accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Insurance Premium Financing

The Company previously entered into short-term agreements to finance certain insurance premiums. As of September 30, 2024, the Company's insurance premium financing agreements had lapsed, and no corresponding liability remained.

Revolving Credit Facility

In October 2021, Vacasa Holdings, LLC and its wholly owned subsidiary (the "Borrower") and certain of its subsidiaries (collectively, the "Guarantors") entered into a credit agreement with JPMorgan Chase Bank, N.A. and the other lenders party thereto from time to time.

The credit agreement, as subsequently amended in December 2021, June 2023, and October 2024 (as amended, the "Credit Agreement"; capitalized terms used herein and not otherwise defined are used as defined in the Credit Agreement), provides for a senior secured revolving credit facility in an aggregate principal amount of $105.0 million ("Revolving Credit Facility"). The Revolving Credit Facility includes a sub-facility for letters of credit in aggregate face amount of $40.0 million, which reduces borrowing availability under the Revolving Credit Facility. Proceeds may be used for working capital and general corporate purposes.

The June 2023 amendment modified the Credit Agreement to replace the LIBOR-based reference rate options with Adjusted Term Secured Overnight Financing Rate ("SOFR") based reference rate options. Subsequent to the amendment, any borrowings under the Revolving Credit Facility are subject to interest, determined as follows:
Alternate Base Rate ("ABR") borrowings accrue interest at a rate per annum equal to the ABR plus a margin of 1.50%. The ABR is equal to the greatest of (i) the Prime Rate, (ii) the New York Federal Reserve Bank Rate plus 0.50%, and (iii) the Adjusted Term SOFR for a one-month interest period plus 1.00%.
Term SOFR borrowings accrue interest at a rate per annum equal to the Adjusted Term SOFR plus a margin of 2.50%. Adjusted Term SOFR means, for any Interest Period, an interest rate per annum equal to the Term SOFR for such Interest Period.

Subsequent to the October 2024 amendment, ABR borrowings accrue interest at a rate per annum equal to the ABR plus a margin of 2.50%, and Term SOFR borrowings accrue interest at a rate per annum equal to the Adjusted Term SOFR plus a margin of 3.50%.

Borrowings under the Revolving Credit Facility do not amortize and are due and payable on October 7, 2026. Amounts outstanding under the Revolving Credit Facility may be voluntarily prepaid at any time and from time to time, in whole or in part, without premium or penalty. In addition to paying interest on the principal amounts outstanding under the Revolving Credit Facility, the Company is required to pay a commitment fee on unused amounts at a rate of 0.25% per annum. The Company is also required to pay customary letter of credit and agency fees.

The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the ability of the Borrower and its restricted subsidiaries to:

create, incur, assume or permit to exist any debt or liens;
merge into or consolidate or amalgamate with any other person, or permit any other person to merge into or consolidate with it, or liquidate or dissolve;
make or hold certain investments;
sell, transfer, lease, license or otherwise dispose of its assets, including equity interests (and, in the case of restricted subsidiaries, the issuance of additional equity interests);
pay dividends or make certain other restricted payments;
substantively alter the character of the business of the Borrower and its restricted subsidiaries, taken as a whole; and
sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its affiliates.

The October 2024 amendment, among other things, amended the minimum amount of consolidated revenue and the compliance thresholds that are measured on a trailing four-quarter basis, as of the last date of each fiscal quarter. The Borrower and its restricted subsidiaries are required to maintain a minimum amount of consolidated revenue, measured on a trailing four-quarter basis, as of the last date of each fiscal quarter, provided that such covenant will only apply if, on such date, the aggregate principal amount of outstanding borrowings under the Revolving Credit Facility and letters of credit (excluding undrawn amounts under any letters of credit in an aggregate face amount of up to $20.0 million and letters of credit that have been cash collateralized) exceeds 35% of the then-outstanding revolving commitments. The Borrower is also required to maintain liquidity of at least $15.0 million as of the last date of each fiscal quarter beginning on June 30, 2022.

The obligations of the Borrower and certain guarantor subsidiaries (the "Guarantors") are secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors. As of September 30, 2024, there were $81.0 million in borrowings outstanding under the Revolving Credit Facility. As of December 31, 2023, there were no borrowings outstanding under the Revolving Credit Facility. As of September 30, 2024, there were $23.4 million of letters of credit issued under the Revolving Credit Facility, and $0.6 million was available for borrowings.

Convertible Notes

On August 7, 2024, the Company, and certain of its majority-owned subsidiaries entered into a note purchase agreement (as subsequently amended on October 25, 2024, the “Note Purchase Agreement”) with the purchaser thereof, DK VCSA Lender LLC (the "Purchaser"), an affiliate of Davidson Kempner Capital Management LP, and certain existing holders of the Company’s Class A Common Stock. The Note Purchase Agreement provides for the issuance and sale of up to $75.0 million aggregate principal amount of first lien senior secured convertible notes due 2029 (the “Convertible Notes”) to the Purchaser. The Convertible Notes are comprised of: (i) $30.0 million of notes (the "Initial Notes") issued on August 7, 2024 (the “Convertible Notes Funding Date”); (ii) up to $20.0 million of notes to be issued pursuant to an option granted by the Company to the Purchaser, which is exercisable at Purchaser’s option within six months after the Convertible Notes Funding Date, on the same terms and conditions as the Initial Notes (the “Notes Option” and the notes in respect thereof the "DK Option Notes"); and (iii) up to $25.0 million of notes to be issued pursuant to the mutual agreement of the Borrower and the Purchaser any time after the Convertible Notes Funding Date, but before the Convertible Notes Maturity Date (as defined below), on the same terms and conditions as the Initial Notes (the “Mutual Option Notes” and together with the DK Option Notes, the “Additional Notes”). In the event the Purchaser does not exercise the Notes Option, then the Company may issue the DK Option Notes to a third-party
purchaser pursuant to the terms of the Note Purchase Agreement. Simultaneously with and pursuant to the Note Purchase Agreement, the Company and certain of its majority-owned subsidiaries, also entered into a collateral agreement (the “Collateral Agreement”) establishing a first priority lien on substantially all of the assets of Holdings, the borrower, and other guarantors, and entered into a guarantee agreement (the “Guarantee Agreement”) guaranteeing the Convertible Notes. The liens established under the Collateral Agreement are pari passu in priority with the liens under the Revolving Credit Facility. As of September 30, 2024, the principal balance outstanding of the Convertible Notes, including paid-in-kind interest settlements, was $30.5 million.

The Convertible Notes bear interest at an annual rate of 11.25%, which is payable in kind for the first three years, by adding the amount of such accrued interest to the principal amount of the Convertible Notes; provided that, at the Borrower’s election, interest may be paid in cash at an annual rate of 9.75%. Beginning on August 7, 2027, the Convertible Notes will bear interest at an annual rate equal to 9.75% payable in cash. The Convertible Notes will mature on August 7, 2029 (the “Convertible Notes Maturity Date”), unless earlier repurchased, redeemed or converted. The Convertible Notes are guaranteed by Holdings and certain other current and future subsidiaries of the Company, and are secured by a first priority lien on substantially all of their respective assets (other than certain excluded assets).

The Convertible Notes are convertible, in whole and not in part (subject to certain limitations described below), into shares of the Company’s Class A Common Stock at the option of the Purchaser; provided, however, that in the event that any conversion of the Convertible Notes would trigger the change of control rules (as defined in the Convertible Notes), then the Convertible Notes shall be converted in part, at the maximum amount permitted without triggering such change of control rules. The initial conversion price of the Convertible Notes is $4.16 (the “Conversion Price”), which is subject to customary anti-dilution adjustments.

From and after August 7, 2027, the Company may redeem the Convertible Notes, in whole or in part, at a redemption price equal to 102% of the aggregate principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest. In addition, from and after August 7, 2027, if the closing price per share of the Class A Common Stock exceeds 225% of the Conversion Price for 20 out of 30 consecutive trading days, the Company may redeem all, but not less than all, of the Convertible Notes at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest. Upon the consummation of a Major Transaction (as defined in the Note Purchase Agreement), the Company may also redeem all, but not less than all, of the Convertible Notes then outstanding in an amount equal to 130% of the initial principal amount of the Convertible Notes to be redeemed, less all accrued interest previously paid in cash.

The Note Purchase Agreement includes customary negative covenants, subject to specified exceptions, including limits on the ability of the Company to incur additional debt. The Note Purchase Agreement also includes customary events of default, the occurrence of which may result in the acceleration of the maturity of the Convertible Notes. In addition, the Company may not permit (i) a certain liquidity threshold (as further defined in the Note Purchase Agreement) to be less than $15.0 million as of the last day of any test period (as defined in the Note Purchase Agreement) commencing with such test period ending on September 30, 2024 and (ii) a certain consolidated EBITDA metric (as further defined in the Note Purchase Agreement) of the Company to be less than $15.0 million as of the last day of any such test period commencing with such test period ending on December 31, 2026.

On the Convertible Notes Funding Date, the Company also issued to the Purchaser an aggregate of 174,825 shares of Class A Common Stock (the “Fee Shares”), representing payment in full of certain amounts payable to the Purchaser in respect of the Initial Notes pursuant to the Note Purchase Agreement.

The October 2024 amendment modified the Note Purchase Agreement to conform the terms of the Note Purchase Agreement to the Credit Agreement, as amended, to the extent they apply to the Note Purchase Agreement.