| Item 1.01. | Entry into a Material Definitive Agreement. |
On May 12, 2023, Power Solutions International, Inc. (the “Company” or “PSI”) amended and restated its $25 million shareholder’s loan agreement (the “Second Shareholder’s Loan Agreement”) with its majority stockholder, Weichai America Corp. (“Weichai”), to extend the loan maturity date to May 20, 2024. The $25 million loan under the Second Shareholder’s Loan Agreement has been fully drawn as of the date of this report and is subordinated to the Company’s existing $130 million senior secured revolving credit facility with Standard Chartered Bank ($125 million loan outstanding as of the date of this report).
Borrowings under the Second Shareholder’s Loan Agreement will incur interest at the applicable Secured Overnight Financing Rate (“SOFR”), plus 4.05% per annum. Further, if the applicable term SOFR is negative, the interest rate per annum shall be deemed as 4.05% per annum. If the interest rate for any loan under the Second Shareholder’s Loan Agreement is lower than Weichai’s borrowing cost, the interest rate for such loan shall be equal to Weichai’s borrowing cost plus 1%.
The Company previously entered into three other separate loan agreements with Weichai, including the $130 million third amended and restated shareholder’s loan agreement (the “First Shareholder’s Loan Agreement”) with maturity date of March 24, 2024, the $50 million shareholder’s loan agreement (the “Third Shareholder’s Loan Agreement”) with maturity date of November 30, 2023, and the $30 million first amended and restated shareholder’s loan agreement (the “Fourth Shareholder’s Loan Agreement”) with maturity date of March 31, 2024. As of May 17, 2023, PSI had no borrowings under the First Shareholder’s Loan Agreement, $50 million of borrowings under the Third Shareholder’s Loan Agreement and $4.8 million of borrowings under the Fourth Shareholder’s Loan Agreement.
The foregoing description of the Second Shareholder’s Loan Agreement is qualified in its entirety by the full text of the Second Shareholder’s Loan Agreement, which is attached hereto as Exhibits 10.1 and incorporated by reference herein.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information included in Item 1.01 of this report is incorporated by reference into this Item 2.03.
| Item 7.01 | Regulation FD Disclosure. |
On May 17, 2023, the Company issued a press release announcing the Second Shareholder’s Loan Agreement, which is attached as Exhibit 99.1 hereto.
The information contained in this Item 7.01 and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by reference in such a filing.
Caution Regarding Forward-Looking Statements
This Form 8-K contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are entitled to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934. The Company has tried to identify these forward-looking statements by using words such as “anticipate,” “believe,” “budgeted,” “contemplate,” “estimate,” “expect,” “forecast,” “guidance,” “may,” “outlook,” “plan,” “projection,” “should,” “target,” “will,” “would,” or similar expressions, but these words are not the exclusive means for identifying such statements. These statements are subject to a number of risks, uncertainties, and assumptions that may cause actual results, performance or achievements to be materially different from those expressed in, or implied by, such statements.
The Company cautions that the risks, uncertainties and other factors that could cause its actual results to differ materially from those expressed in, or implied by, the forward-looking statements, include, without limitation: the impact of the macro-economic environment in both the U.S. and internationally on our business and expectations regarding growth of the industry; uncertainties arising from global events (including the Russia-Ukraine conflict), natural disasters or pandemics, and their impact on material prices;
