Distribution Solutions Group, Inc. 8-K

What Happened

• On December 18, 2025, Distribution Solutions Group, Inc. (DSGR) entered into a Second Amended and Restated Credit Agreement that replaces its April 1, 2022 credit agreement. The new facility provides a $700 million senior secured initial term loan and a $400 million senior secured revolving credit facility (with a $25 million letter-of-credit subfacility and $10 million swingline). The Company announced the deal in a press release dated December 22, 2025.
• DSGR intends to use the term loan proceeds to repay the approximately $709 million outstanding under the prior credit agreement. All loans under the new agreement mature on December 18, 2030. The term loan requires quarterly principal repayments of $8.75 million (subject to adjustment).

Key Details

• Facility size: $700M initial term loan + $400M revolving credit (total $1.1B); commitments may be increased by up to $500M with lender consent.
• Interest: option of Alternate Base Rate/Canadian Prime + 0.00%–1.75% or Adjusted Term SOFR/Adjusted Daily Simple SOFR + 1.00%–2.75%, with a transitional margin of 1.50% (base-rate) / 2.50% (other) until first post-closing quarter results.
• Fees: commitment fee on unused revolver of 0.15%–0.35% (0.30% transitional rate); other customary closing, arrangement and letter-of-credit fees apply.
• Covenants and security: first-priority liens on substantially all assets; guarantees by U.S. and Canadian subsidiaries (subject to exceptions); financial covenants require a minimum consolidated interest coverage ratio of 2.75 and a maximum total net leverage ratio of 4.25.

Why It Matters

• Liquidity and refinancing: The transaction secures committed financing through 2030 and refinances the prior $709M balance, reducing uncertainty about near-term funding. That supports working capital, permitted acquisitions and general corporate needs.
• Financial constraints: The bank covenants (interest coverage and leverage ratios) and customary restrictions on dividends, additional debt, asset sales and certain transactions could limit DSGR’s flexibility for share buybacks, large distributions or new financings if covenant metrics deteriorate.
• Cost of capital: Interest margins and fees are tied to DSGR’s leverage ratio, so borrowing costs may rise if leverage increases — an important factor for investors watching the company’s debt levels and cash flow performance.