Quanta Services(PWR) - 2024 Q2 - Quarterly Results

Thirteenth Amendment to Fourth Amended and Restated Credit Agreement Introduction and Amendments This amendment, effective July 31, 2024, modifies the existing credit agreement by altering text, amending schedules, and adjusting commitments - The Thirteenth Amendment to the Fourth Amended and Restated Credit Agreement is effective as of July 31, 2024[1] - The amendment modifies the existing credit agreement by deleting stricken text and adding double-underlined text as detailed in Annex A[3] - Schedules 1.01(b), 2.01, and 2.03 are amended, and a new Schedule 2.10 is added. Revolving Commitments and Pro Rata Shares are adjusted as per the new Schedule 2.01[3] - Lenders have waived any amounts payable under Section 3.05 of the credit agreement resulting from reallocations or prepayments connected to this amendment[4] New Lender Joinder This section details the terms for new lenders joining the credit agreement, requiring them to confirm authority, eligibility, and adherence to the amended terms - Each new lender must represent and warrant its full power and authority to execute the agreement and become a lender under the Amended Credit Agreement[5] - New lenders confirm they have performed their own independent credit analysis and will continue to make their own credit decisions without reliance on the Administrative Agent or other lenders[5] - Upon the Thirteenth Amendment's effective date, each new lender will be officially recognized as a "Lender" for all purposes under the Amended Credit Agreement and other Loan Documents[5] Conditions Precedent The amendment's effectiveness is contingent on conditions including executed agreements, legal opinions, financial statements, fee payments, and KYC compliance - The Administrative Agent must receive counterparts of the agreement executed by all Borrowers, the Guarantor, all Lenders (including new ones), the Administrative Agent, Swing Line Lenders, and L/C Issuers[6] - Receipt of favorable legal opinions from counsel to the Loan Parties is required[6] - The Company must provide audited financial statements for the last three fiscal years and unaudited statements for the most recent quarter. The filing of these statements with the SEC satisfies this requirement. The agent acknowledges receipt of financials through Q1 2024[8] - All accrued and unpaid fees and interest on Revolving Loans must be paid by the Borrowers, along with all agreed-upon expenses of the Administrative Agent[8] Miscellaneous This section ratifies the amended credit agreement, confirms no default, and specifies New York law governance and electronic signature provisions - The Existing Credit Agreement and the obligations of the Loan Parties are ratified and confirmed to remain in full force and effect, as amended by this agreement[9] - The Loan Parties represent and warrant that all necessary corporate actions have been taken, the agreement is a legal and binding obligation, and no governmental consents are required, other than standard SEC filings[10] - Immediately after the amendment takes effect, all representations and warranties in the Amended Credit Agreement are true and correct, and no Default or Event of Default has occurred or is continuing[10] - The agreement and any related disputes shall be governed by the laws of the State of New York[11] Annex A: Amended Credit Agreement ARTICLE I: Definitions and Accounting Terms This article defines key terms and accounting principles, reflecting changes like increased Aggregate Revolving Commitments, Permitted Receivables Financing, and an updated Maturity Date Change in Aggregate Revolving Commitments | Commitment | Previous Amount | New Amount | | :--- | :--- | :--- | | Aggregate Revolving Commitments | $2,640,000,000 | $2,800,000,000 | - The Maturity Date for the Aggregate Revolving Commitments is extended to July 31, 2029[202] - The limit for Permitted Receivables Financing has been increased from $300 million to $600 million[226] - The "Threshold Amount" for triggering certain events of default or other clauses has been increased from $300 million to $400 million[283] ARTICLE II: The Commitments and Credit Extensions This article details credit facility mechanics, including Revolving Loans, Swing Line Loans, and Letters of Credit, outlining borrowing procedures, prepayments, fee structures, and incremental facility options - Lenders severally agree to provide Revolving Loans up to their individual Revolving Commitment, with the Total Revolving Outstandings not to exceed the Aggregate Revolving Commitments of $2.8 billion[317][645] - The Company may increase the Aggregate Revolving Commitments or borrow new Incremental Term Loans, subject to the "Incremental Cap," which is the sum of a fixed basket ($400 million) and an unlimited amount if the pro forma Consolidated Leverage Ratio meets specified requirements[170][323] - The Company has the option to request a one-year extension of the Maturity Date on the first and second anniversaries of the Thirteenth Amendment Effective Date, subject to lender approval[403] Applicable Rates based on Debt Rating / Leverage Ratio | Pricing Level | Debt Rating (S&P/Moody's) | Consolidated Leverage Ratio | Revolving Loans - Term SOFR / L/C Fee | Revolving Loans - Base Rate | Commitment Fee | | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | ≥ BBB+ / Baa1 | < 0.75:1.00 | 1.125% | 0.125% | 0.10% | | 2 | BBB / Baa2 | ≥ 0.75:1.00 but < 1.25:1.00 | 1.250% | 0.250% | 0.125% | | 3 | BBB- / Baa3 | ≥ 1.25:1.00 but < 1.75:1.00 | 1.375% | 0.375% | 0.175% | | 4 | BB+ / Ba1 | ≥ 1.75:1.00 but < 2.50:1.00 | 1.500% | 0.500% | 0.225% | | 5 | ≤ BB / Ba2 | ≥ 2.50:1.0 | 1.750% | 0.750% | 0.275% | ARTICLE III: Taxes, Yield Protection and Illegality This article covers tax responsibilities, lender yield protection, and illegality procedures, including tax withholding provisions and compensation for increased costs due to law changes - All payments by Loan Parties under any Loan Document must be made without deduction or withholding for any Taxes, except as required by law. If Indemnified Taxes are withheld, the payable sum must be increased so the recipient receives the full amount[406][408] - Lenders must provide appropriate tax documentation (e.g., IRS Forms W-9, W-8BEN, W-8BEN-E) to the Company and Administrative Agent to establish exemptions from or reductions in U.S. federal withholding tax[412][414] - If a Change in Law increases the cost for a Lender to make or maintain a loan or reduces their rate of return, the Company must pay additional amounts to compensate the Lender for such increased costs or reductions[427] ARTICLE IV: Guaranty This article establishes the Guarantor's absolute and unconditional primary payment obligation for Foreign Borrowers' obligations and Guaranteed Swap/Treasury Management Agreements - The Guarantor (the Company) guarantees the prompt payment of all Obligations in full when due, acting as a primary obligor and not merely as a surety[434] - The Guarantor's obligations are absolute and unconditional, irrespective of any extensions, waivers, or modifications to the underlying Obligations[437] - The article includes a "keepwell" provision, where each Qualified ECP Guarantor agrees to provide financial support to any Specified Loan Party to ensure its obligations under Swap Contracts can be met, in compliance with the Commodity Exchange Act[444] ARTICLE V: Conditions Precedent to Credit Extensions This article outlines conditions for credit extensions, requiring executed documents, legal opinions, and financial statements for initial, and true representations and no defaults for subsequent extensions - The initial credit extension is subject to the Administrative Agent's receipt of executed Loan Documents, favorable legal opinions, financial statements, and other closing documents[446] - For all subsequent credit extensions, the representations and warranties of the Loan Parties must be true and correct in all material respects, and no Default or Event of Default must have occurred and be continuing[452][454] ARTICLE VI: Representations and Warranties Loan Parties provide representations and warranties covering legal existence, authorization, binding effect, financial accuracy, litigation absence, legal compliance, and solvency - Each Loan Party represents it is duly organized, validly existing, and has the requisite power and authority to execute and perform its obligations under the Loan Documents[462] - The Loan Parties warrant that their financial statements are prepared in accordance with GAAP and fairly present their financial condition, and that since December 31, 2023, no Material Adverse Effect has occurred[467][468] - The Loan Parties confirm they are in compliance with all applicable laws, including ERISA, OFAC sanctions, and Anti-Corruption Laws, and that no Default or Event of Default has occurred[470][474][483][487] ARTICLE VII: Affirmative Covenants This article outlines affirmative covenants, including requirements for financial reporting, default notification, obligation payment, entity preservation, property maintenance, legal compliance, and inspection rights - The Company must deliver audited annual financial statements within 90 days of fiscal year-end and unaudited quarterly financial statements within 50 days of each quarter-end[490][491] - Concurrently with financial statements, the Company must provide a Compliance Certificate demonstrating adherence to the agreement's covenants[493] - The Company must promptly notify the Administrative Agent of any Default, any matter that could result in a Material Adverse Effect, or any significant ERISA Event[495] - Proceeds from Revolving Loans are to be used for working capital, capital expenditures, and other lawful corporate purposes. The proceeds from Delayed Draw Term Loans were designated for the Blattner Acquisition[506] ARTICLE VIII: Negative Covenants This article restricts Loan Parties from incurring liens, certain acquisitions, excessive indebtedness, fundamental changes, and asset disposals, and sets financial covenants like leverage and interest coverage ratios - The Company must not permit its Consolidated Leverage Ratio to exceed 3.5 to 1.0, with a temporary increase to 4.0 to 1.0 for the four quarters following a significant Permitted Acquisition[529] - The Company must not permit its Consolidated Interest Coverage Ratio to be less than 3.0 to 1.0 at the end of any fiscal quarter[529] - The agreement restricts creating liens, with numerous exceptions for ordinary course of business, tax liens, and liens securing permitted indebtedness[511] - The limit for Indebtedness in respect of surety-backed letters of credit was increased from $300 million to $500 million[520] ARTICLE IX: Events of Default and Remedies This article defines "Event of Default" and outlines remedies for Lenders and the Administrative Agent, including non-payment, covenant breaches, incorrect representations, cross-defaults, bankruptcy, and change of control, allowing for commitment termination and obligation acceleration - Events of Default include failure to pay principal or interest, violation of covenants, incorrect representations, cross-default on other indebtedness exceeding the Threshold Amount ($400 million), bankruptcy proceedings, and a Change of Control[536][537][539] - Upon an Event of Default, the Administrative Agent, with the consent of the Required Lenders, can terminate commitments, accelerate all outstanding loans and other obligations, and exercise all available rights and remedies[540] - In the case of bankruptcy, the termination of commitments and acceleration of obligations are automatic[540] - Any funds received after an Event of Default will be applied in a specific order of priority: first to agent expenses, then lender fees, then interest, then principal and other obligations, with any remaining balance returned to the Borrowers[541][542] ARTICLE X: Administrative Agent This article defines the Administrative Agent's role, rights, and responsibilities, including exculpatory provisions protecting the Agent from liability except for gross negligence or willful misconduct, and outlines the process for Agent resignation, removal, and succession - Each Lender and L/C Issuer irrevocably appoints Bank of America to act as the Administrative Agent, authorizing it to take actions and exercise powers as delegated by the Loan Documents[546] - The Administrative Agent has no duties or obligations except those expressly set forth in the Loan Documents and is not subject to any fiduciary duties[549] - The Agent is entitled to rely on notices, certificates, and other documents believed to be genuine and is not liable for actions taken in good faith or in accordance with the advice of legal counsel or other experts[553] - The Administrative Agent may resign at any time by giving notice, and the Required Lenders have the right to appoint a successor with the Company's consent[558] ARTICLE XI: Miscellaneous This final article contains standard legal and operational clauses, covering amendments, waivers, notices, confidentiality, expenses, indemnification, successors, assigns, governing law (New York), waiver of jury trial, and electronic signatures - Amendments and waivers generally require the written consent of the Required Lenders and the applicable Loan Party, though certain changes (e.g., extending commitments, reducing principal or interest) require the consent of each affected Lender[570][571] - The Company agrees to indemnify the Administrative Agent, Lenders, and L/C Issuers against losses, claims, and expenses arising from the credit facility, except those resulting from the indemnitee's gross negligence or willful misconduct[587] - The agreement and any related disputes are governed by the laws of the State of New York. All parties consent to the non-exclusive jurisdiction of New York courts[625] - All parties irrevocably waive their right to a trial by jury in any legal proceeding related to the Loan Documents[628] Schedules Schedules provide detailed information, including existing letters of credit, revolving commitment amounts, pro rata shares, L/C commitments, and day count basis for interest calculation Schedule 2.01: Revolving Commitments and Pro Rata Shares (Top 5 Lenders) | Lender | Revolving Commitment | Pro Rata Share | | :--- | :--- | :--- | | Wells Fargo Bank, National Association | $315,000,000.00 | 11.250000000% | | Bank of America, N.A. | $315,000,000.00 | 11.250000000% | | PNC Bank, National Association | $285,000,000.00 | 10.178571429% | | Truist Bank | $285,000,000.00 | 10.178571429% | | JPMorgan Chase Bank, N.A. | $285,000,000.00 | 10.178571429% | | Total | $2,800,000,000.00 | 100.000000000% | Schedule 2.03: L/C Commitments | L/C Issuer | L/C Commitment | | :--- | :--- | | Wells Fargo Bank, National Association | $400,000,000 | | Bank of America, N.A. | $400,000,000 | | PNC Bank, National Association | $350,000,000 | | Truist Bank | $350,000,000 | | JPMorgan Chase Bank, N.A. | $350,000,000 | | BNP Paribas | $200,000,000 | | Bank of Montreal | $100,000,000 | Exhibits Exhibits provide standardized forms for certifications and notices, including U.S. Tax Compliance Certificates for foreign lenders to claim withholding tax exemptions - Exhibits G-1 through G-4 provide the specific forms for U.S. Tax Compliance Certificates required under Section 3.01(e)[648][651][654][657] - These certificates are used by foreign lenders and participants to certify they are not a "bank," a "10 percent shareholder," or a "controlled foreign corporation" related to the Borrower, which is necessary to claim the portfolio interest exemption from U.S. withholding tax[649][652][655][658]