| Item 1.01 | Entry into a Material Definitive Agreement. |
Indenture
On February 2, 2021, Resolute Forest Products Inc. (the “Company”) closed its previously announced private offering (the “Offering”) of $300 million aggregate principal amount of 4.875% Senior Notes due 2026 (the “Notes”). The Notes were issued pursuant to an Indenture, dated as of February 2, 2021 (the “Indenture”), among the Company, the guarantors party thereto, and Wells Fargo, National Association, as trustee.
The Company is using the net proceeds of the Offering, together with additional cash, to satisfy and discharge the Company’s 5.875% Senior Notes due 2023 (the “2023 Notes”) and the indenture and notes related thereto, as described in Item 8.01 below.
The Notes mature on March 1, 2026, unless earlier redeemed or repurchased. No sinking fund is provided for the Notes. Cash interest on the Notes will accrue from February 2, 2021 and is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021, at a rate of 4.875% per year.
The Notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by all of the Company’s current and, subject to certain conditions, future material wholly owned U.S. subsidiaries.
On or after March 1, 2023, the Company may redeem the Notes at its option, in whole at any time or in part from time to time, upon giving not less than 15 nor more than 60 days’ notice, at the redemption prices set forth in the Indenture. In addition, prior to March 1, 2023, the Company may redeem the Notes at its option, in whole at any time or in part from time to time, upon giving not less than 15 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a “make-whole” premium and accrued and unpaid interest. Notwithstanding the foregoing, at any time and from time to time prior to March 1, 2023, the Company may redeem up to 40% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional notes) using the net cash proceeds of one or more equity offerings at a redemption price equal to 104.875%, plus accrued and unpaid interest, so long as at least 60% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional notes) remains outstanding after each such redemption.
The Indenture contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things: (i) incur additional indebtedness or issue certain preferred shares; (ii) make dividend payments on or make other distributions in respect of their capital stock or make other restricted payments; (iii) make certain investments; (iv) sell certain assets; (v) create liens on assets; (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; and (vii) enter into certain transactions with their affiliates. These covenants are subject to a number of important limitations and exceptions. Additionally, upon the occurrence of specified change of control triggering events, the Company shall be required to offer to repurchase the Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the purchase date.
