UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2024
THE DAVEY TREE EXPERT COMPANY
(Exact name of registrant as specified in its charter)
| Ohio | 000-11917 | 34-0176110 |
(State or other jurisdiction
of incorporation) | (Commission
File Number) | (IRS Employer Identification
Number) |
1500 North Mantua Street
P.O. Box 5193
Kent, OH 44240
(Address of principal executive offices) (Zip Code)
(330) 673-9511
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| | |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | | Trading Symbol(s) | | Name of Each Exchange on Which Registered |
| N/A | | N/A | | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01 | Entry into a Material Definitive Agreement |
See the information set forth in Item 2.03 of this Current Report on Form 8-K, which is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
On July 29, 2024, The Davey Tree Expert Company, as borrower (the “Company”), entered into a $400 million Fifth Amended and Restated Credit Agreement (the “Credit Agreement”) with the lending institutions party thereto, KeyBank National Association, as administrative agent, and PNC Bank, National Association and Wells Fargo Bank, National Association, as co-syndication agents. The Credit Agreement replaces the $325 million credit agreement, dated as of August 18, 2021, by and among the Company, the lending institutions party thereto, KeyBank National Association, as lead arranger, syndication agent and administrative agent, and PNC Bank, National Association and Wells Fargo Bank, National Association, as co-documentation agents, as the same was amended, supplemented or otherwise modified from time-to-time prior to July 29, 2024 and extended the term of the Company’s revolving credit facility to July 29, 2029.
The Credit Agreement provides for a revolving credit commitment of $400 million, which includes a combined term loan and letter of credit commitment of $150 million and a swing line commitment of $50 million. Under certain circumstances, the Company may increase the revolving credit commitment and/or establish new incremental term loan commitments in an aggregate amount of up to $150 million. Proceeds of borrowings under the Credit Agreement may be used for working capital, capital expenditures and other general corporate purposes.
Borrowings under the Credit Agreement shall bear interest at a rate per annum equal to, at the Company’s election, (a) the Secured Overnight Financing Rate (“SOFR”) plus a margin of .875% to 1.50% that is adjusted based on the Company’s leverage ratio at the time of such borrowing or (b) the Base Rate (as defined in the Credit Agreement). Fees payable by the Company under the Credit Agreement include a letter of credit fee (the margin applicable to SOFR borrowings), a letter of credit fronting fee with respect to each letter of credit (.10%) and commitment fees on the average daily unused portion of the total revolving credit commitment (a range of .10% to .225%, based on the Company’s leverage ratio).
The Company’s payment obligations under the Credit Agreement are guaranteed by Davey Tree Surgery Company, a Delaware corporation, Wolf Tree Inc., a Tennessee corporation, Davey Resource Group, Inc., a Delaware corporation, and Wetlands Studies and Solutions, Inc., a Virginia corporation, each of which is a subsidiary of the Company.
The Credit Agreement contains certain restrictive covenants customary for transactions of this type (subject to negotiated exceptions and baskets), including restrictions on the Company and its subsidiaries with respect to liens, indebtedness, investments and loans, acquisitions and mergers, sales of assets, and payments of dividends and stock repurchases. In addition, during the term of the Credit Agreement, the Company is required to maintain a maximum leverage ratio (not to exceed 3.25 to 1.00, with exceptions in case of material acquisitions) and a minimum interest coverage ratio (no less than 3.00 to 1.00).
The Credit Agreement also provides for customary events of default with corresponding grace periods, including: (1) failure to pay principal, interest or fees under the Credit Agreement or a related note when due and payable; (2) failure to comply with other covenants and agreements contained in the Credit Agreement, subject in certain cases to notice thereof and the opportunity to cure such failures; (3) making false or erroneous representations and warranties; (4) certain defaults under other debt obligations of the Company; (5) material adverse events under the Employee Retirement Income Security Act of 1974; (6) money judgments, material adverse changes or events regarding the validity of the Credit Agreement or other loan documents; (7) a change in control; and (8) certain events of bankruptcy, insolvency or reorganization affecting the Company or certain of its subsidiaries. Upon the occurrence and during the continuation of an event of default, the lenders may, among other things, terminate the obligations to make loans and to issue letters of credit under the Credit Agreement, declare the Company’s obligations under the Credit Agreement to become due and payable and/or exercise any and all rights and remedies available under the Credit Agreement and applicable law.
Certain of the lenders and their affiliates are parties to the Company’s accounts receivable securitization facility, and have provided, from time-to-time, and may continue to provide, investment banking, commercial banking, financial and other services to the Company, including letters of credit, depository and account processing services, for which the Company has paid and intends to pay customary fees.
The foregoing description of the Credit Agreement is merely a summary of the terms and conditions of the Credit Agreement and does not purport to be a complete description of the agreement. Accordingly, the foregoing is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
Exhibit
Number | Description to Exhibit |
| | |
| 10.1 | Fifth Amended and Restated Credit Agreement among The Davey Tree Expert Company, as borrower, various lending institutions party thereto, as banks, KeyBank National Association, as administrative agent, and PNC Bank, National Association and Wells Fargo Bank, National Association, as co-syndication agents, dated as of July 29, 2024.* |
| | |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
* Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | THE DAVEY TREE EXPERT COMPANY |
| | | |
| | By: | /s/ Joseph R. Paul |
| | | Joseph R. Paul, Executive Vice President,
Chief Financial Officer and Assistant Secretary |
Date: July 30, 2024
