A pricing grid clause outlines a structured framework for determining the cost of goods or services based on specific variables, such as volume, tiers, or market conditions. It provides clarity and flexibility in pricing by aligning costs with predefined criteria, ensuring transparency and adjustability over the contract's duration.
Pricing. The Administrative Agent and Lenders acknowledge and agree that, notwithstanding the actual Consolidated Leverage Ratio as of March 31, 2019, the Applicable Margin under the Credit Agreement shall remain at Level 1 in the Pricing Grid until such date as the financial statements and Compliance Certificate are delivered (or were required to be delivered) for the quarter ending June 30, 2019.
Until the last day of the fourth full fiscal quarter ending after the Closing Date (the “Pricing Grid Date”), the Applicable Margin will be: • For ABR Loans: 6.00% • For Eurodollar Loans: 7.00% On the Pricing Grid Date, and on the last day of each of the five (5) full fiscal quarters immediately following the Pricing Grid Date, the Borrowers shall have the option to (i) retain the applicable margins set forth above, through but not including the last day of the next fiscal quarter or (ii) switch to the applicable margins set forth in the grid below (in each case, a “Pricing Grid Election”); provided, that no such Pricing Grid Election shall be made unless the pro forma Total Net Leverage Ratio is less than or equal to 6.50:1.00 (except for the mandatory conversion made on the Mandatory Conversion Date).
The Pricing Grid Election will be deemed to be made upon the earlier of (i) the mandatory conversion to the pricing grid set forth above on the Mandatory Conversion Date and (ii) the election of the Borrowers to switch to the pricing grid below at any time prior to such date (which, for the avoidance of doubt, shall be no earlier than the Pricing Grid Date).
(a) Grid Pricing Criteria. Other than for the Tama, Iowa processing facility (“Tama Plant”) as provided below, the purchase price for cattle purchased by National Beef under this Agreement shall be an amount determined pursuant to National Beef’s pricing grid for cattle to be delivered through USPB by USPB members, as the pricing grid may be modified or supplemented from time to time through mutual agreement by National Beef and USPB; provided, however, that the pricing grid shall at all times be no less favorable than any other pricing grid being utilized by National Beef; and provided, further, however, that the pricing grid shall be competitive with National Beef’s major competitors for the purchase of cattle. “Competitive with National Beef’s major competitors” means the pricing grid is competitive with the best pricing grids offered by any two or more competitors. For purposes of the pricing grid, National Beef shall grade beef derived from cattle purchased under this Agreement in accordance with standard industry practice. An example of grid pricing is given on Exhibit A. For the Tama Plant, the purchase price for cattle delivered by USPB members under this Agreement shall be no less favorable than any other pricing grid that National Beef offers to any other seller of cattle delivering to the Tama Plant or to non-grid cattle with comparable performance.
The $650.0 million Credit Facility’s maturity was extended to October 2027, inclusive of two optional six-month extensions. The Credit Facility’s interest rate is based on a pricing grid, in line with the prior pricing grid, of 145 to 250 basis points over the applicable adjusted term SOFR.
The first $460.0 million term loan matures in October 2024. The second $460.0 million term loan matures in October 2025. The third $460.0 million term loan matures in October 2027. The interest rate on all three term loans is based on a pricing grid, in line with the prior pricing grid, of 140 to 245 basis points over the applicable adjusted term SOFR.
Furthermore, the per annum interest rate applicable to any principal amounts outstanding under the Third A&R Credit Agreement for U.S. Dollar loans will be equal to (i) Adjusted Term SOFR plus (ii) an applicable margin varying from 1.25% to 2.00%, subject to a pricing grid based on the senior secured net leverage ratio. The Third A&R Credit Agreement provides for an annual commitment fee varying from 0.20% to 0.30%, also subject to a pricing grid based on the senior secured net leverage ratio, applied to the average daily unused amount of the Revolving Credit Facility. In comparison, the Existing Credit Agreement provided for a per annum interest rate for U.S. Dollar loans equal to: (a) LIBOR plus an applicable margin varying from 2.00% to 4.00%, subject to a pricing grid based on the total net leverage ratio, and (b) an annual commitment fee varying from 0.25% to 0.40%, also subject to a pricing grid based on the total net leverage ratio, applied to the average daily unused amount of the existing facility thereunder.
The applicable interest rate margin varies from 2.0% per annum to 3.25% per annum for LIBOR Loans, and from 1.5% per annum to 3.0% per annum for ABR Loans, in each case depending on the Company’s consolidated leverage ratio, and is determined in accordance with a pricing grid set forth in the Credit Agreement (the “Pricing Grid”). Interest on LIBOR Loans is payable in arrears on the last day of each applicable interest period, and interest on ABR Loans is payable in arrears at the end of each calendar quarter. There are no prepayment penalties in the event the Company elects to prepay and terminate the Credit Facility prior to its scheduled maturity date, subject to LIBOR breakage and redeployment costs in certain circumstances.
“Applicable Margin” shall mean, for any date of determination prior to the last day of the fourth full fiscal quarter ending after the Closing Date (the “Pricing Grid Date”), with respect to the Term Loans a rate per annum equal to (i) with respect to Eurodollar Loans, 7.00% and (ii) with respect to ABR Loans, 6.00%. On the Pricing Grid Date, and on the last day of each of the five (5) full fiscal quarters immediately following the Pricing Grid Date, the Borrowers shall have the option to (i) retain the Applicable Margins set forth above, through but not including the last day of the next fiscal quarter or (ii) switch to the Applicable Margins set forth in the grid below (in each case, a “Pricing Grid Election”); provided, that no such Pricing Grid Election shall be made unless the pro forma Total Net Leverage Ratio is less than or equal to 6.50:1.00 (except for the mandatory conversion made on the Mandatory Conversion Date as set forth below).
Interest Rates and Fees. Borrowings under the New Revolving Credit Facility bear interest at a rate per annum equal to, at the Borrowers’ option, either (a) an alternate base rate or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made (the “Adjusted LIBO Rate”) plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a grid (the “Pricing Grid”) based on the ratio of (a) consolidated debt to (b) consolidated EBITDAR (“Leverage Ratio”). Additionally, the Company will pay facility fees, calculated at a rate per annum determined in accordance with the Pricing Grid, on the full amount of the New Revolving Credit Facility, payable quarterly in arrears, and certain fees with respect to letters of credit that are issued.
Amounts outstanding under the 2021 BSP Term Loan bear interest at either (i) LIBOR plus 6.50% - 7.00% (determined by reference to a net leverage pricing grid), subject to a 1.00% LIBOR floor, or (ii) base rate plus 5.50% - 6.00% (determined by reference to a net leverage pricing grid), subject to a 2.00% base rate floor. The 2021 BSP Term Loan matures in June 2027.
The pricing grid was amended to, among other matters, include an interest rate of Secured Overnight Financing Rate plus an applicable margin, as allowed under Amendment No. 10 due to the transition away from LIBOR as a benchmark interest rate.
During the Limited Availability Period (notwithstanding the pricing grid set forth above), the applicable rate shall be (a) solely to the extent that the aggregate revolving exposures exceeds $100 million, 5.75% with respect to such excess and (b) with respect to all other revolving exposures, the sum of the rate determined by the Administrative Agent in accordance with the pricing grid set forth above, plus 0.50%.
A Pricing Grid is a structured tool used to determine the pricing of goods, services, or financial products based on specific criteria or conditions. It is commonly represented in a tabular format where different pricing tiers or options are listed, often related to volume, term, or other variables. Pricing grids provide clarity and consistency in pricing decisions and help manage complex pricing arrangements.
Using a Pricing Grid is beneficial when:
To write a Pricing Grid, follow these steps:
Example:
Volume Tier Contract Length Price Per Unit 1-100 1 year $10 101-500 1 year $9 501+ 1 year $8 1-100 2 years $9.5 101-500 2 years $8.5 501+ 2 years $7.5
Contracts that often include a Pricing Grid are:
In these contexts, pricing grids provide flexibility and precision in pricing to better cater to various business and operational needs.
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