Company: ACEL
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001698991-25-000051
Chunk: 83

Company: Accel Entertainment, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Item 2
Chunk 83
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 or (ii) Term SOFR for an applicable interest period, in each case plus an applicable margin. The applicable margin is determined by reference to the Borrower’s First Lien Net Leverage Ratio (as defined in the Credit Agreement) and ranges from (i) 0.75% to 1.75% for base rate borrowings and (ii) 1.5% to 2.5% for Term SOFR borrowings. As of September 30, 2025, the weighted-average interest rate on our borrowings was approximately 6.5%.

The Credit Agreement contains customary affirmative and negative covenants including limitations on the ability of the Company, the Borrower, and their restricted subsidiaries to, amongst other things, grant additional liens, incur additional indebtedness, merge or consolidate, dispose of assets, engage in certain transactions with affiliates, and make restricted payments. The Credit Agreement also requires the Borrower to maintain, as of the last day of each fiscal quarter, (i) a First Lien Net Leverage Ratio no greater than 4.75 to 1.00 and (ii) a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of at least 1.20 to 1.00. The Credit Agreement includes customary events of default, the occurrence of which could permit the administrative agent to, amongst other things, declare all amounts owing under the credit facilities to be immediately due and payable, exercise remedies with respect to the collateral, and terminate the lenders’ commitments thereunder. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

 We were in compliance with all debt covenants under the Credit Agreement as of September 30, 2025 and expect to remain in compliance for the next 12 months. 

Interest rate caplets

We manage our exposure to some of our interest rate risk through the use of interest rate caplets, which are derivative financial instruments. On January 12, 2022, we hedged the variability of the cash flows attributable to the changes in the 1-month SOFR interest rate on the first $300 million of the term loan under the prior credit agreement by entering into a 4-year series of 48 deferred premium caplets (“caplets”), which remain in effect under the new Credit Agreement and are set to expire in January 2026.

We recognized an unrealized loss, net of taxes, on the change in fair value of the caplets of