Facility) of $30 million and, during a Financial Covenant Trigger Period (as defined in the Amendment), maintain a minimum a Consolidated Fixed Charge Coverage Ratio (as defined in the Amendment) of at least 1.00 to 1.00 (such covenants, the “Financial Covenants”).
New Term Loan Facility
On June 23, 2020, the Company entered into a credit agreement (the “Term Loan Agreement”), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Pathlight Capital LP, as administrative agent (in such capacity, the “Term Loan Agent”).
The Term Loan Agreement provides the Company with a secured term loan credit facility of $70 million (the “Term Loan Facility”). The Term Loan Facility provides for a borrowing base that is derived from the Company’s machinery and equipment, intellectual property and real property, subject to certain reserves and other limitations. The Term Loan Facility is scheduled to mature on June 23, 2025.
Borrowings under the Term Loan Facility will bear interest at a rate per annum equal to LIBOR for a three-month interest period, plus an applicable margin of 12.0%.
The Company must use cash proceeds from certain dispositions, including sales of real estate, equity and debt issuances and extraordinary events to prepay outstanding loans under the Term Loan Facility, subject to specified exceptions, including the prepayment requirements with respect to the Amended ABL Credit Facility. Prepayments of loans under the Term Loan Facility prior to the third anniversary of the closing date are subject to certain premiums.
All obligations under the Term Loan Agreement are guaranteed by each of the Company’s wholly owned domestic material subsidiaries. All obligations under the Term Loan Agreement, and guarantees of those obligations, are secured by a first priority lien on the Term Priority Collateral and a second priority lien on the ABL Priority Collateral.
The Term Loan Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Company’s ability and the ability of its subsidiaries to create liens, to undertake fundamental changes, to incur debt, to sell or dispose of assets, to make investments, to make restricted payments such as dividends, distributions or equity repurchases, to change the nature of their businesses, to enter into transactions with affiliates and to enter into certain burdensome agreements.
In addition, the Term Loan Agreement requires the Company to comply with the Financial Covenants.
The Term Loan Agreement also contains customary affirmative covenants and events of default, including a cross-default provision in respect of certain material indebtedness and a change of control provision. If an event of default occurs, the lenders may choose to accelerate the maturity of the Term Loan Facility and require repayment of all obligations thereunder.
The foregoing summaries of the Amendment and the Term Loan Agreement do not purport to be complete and are subject to and qualified in their entirety by reference to the Amendment and the Term Loan Agreement, copies of which are filed as Exhibits 10.1 and 10.2 hereto and are incorporated herein by reference.
Section 7 – Regulation FD
| Item 7.01 | Regulation FD Disclosure. |
On June 23, 2020, the Company issued a press release announcing the Amended ABL Credit Facility and Term Loan Facility. The full text of the press release is attached hereto as Exhibit 99.1.
The information in Item 7.01 of this Current Report on Form8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
