Item 1.01 Entry Into a Material Definitive Agreement.
On December 20, 2019 (the “Closing Date”) Ducommun Incorporated, a Delaware corporation (“Ducommun”) and certain of its subsidiaries entered into an Incremental Term Loan Lender Joinder Agreement and Additional Credit Extension Amendment (the “Amendment”) to Ducommun’s Amended and Restated Credit Agreement with Bank of America, N.A., as administrative agent, swingline lender and issuing bank, and the lender parties thereto dated November 21, 2018 (the “Credit Agreement”).
The Amendment provides for (1) an incremental $140 million senior secured term loan facility (the “Term Loan A Facility”) maturing on December 20, 2024, and (2) an extension of the maturity date of the $100 million senior secured revolving credit facility (the “Revolving Credit Facility”) to December 20, 2024. Ducommun intends to use the proceeds of (1) the Term Loan A Facility to repay the existing amount outstanding on its existing revolving credit facility, repay a portion of the existing term facility and fees and expenses related to the Amendment and (2) any future borrowings under the Revolving Credit Facility for general corporate purposes.
The initial variable interest rate on amounts outstanding under the Term Loan A Facility will be LIBOR plus 2.00%, amortizing 1.25% quarterly. The Amendment modifies the interest rate on amounts outstanding under the Revolving Credit Facility to match the interest rates applicable to the Term Loan A Facility, with the modified interest rates to increase or decrease based upon the following pricing tiers and the applicable Consolidated Total Net Leverage Ratio:
| | | | | | | | | | |
Pricing Tier | | Consolidated Total
Net Adjusted Leverage Ratio | | Eurodollar Rate
Loans | | | Base Rate Loans | |
I | | > 4.50 to 1.0 | | | 2.50 | % | | | 1.50 | % |
II | | < 4.50 to 1.0 but > 4.00 to 1.0 | | | 2.25 | % | | | 1.25 | % |
III | | < 4.00 to 1.0 but > 3.00 to 1.0 | | | 2.00 | % | | | 1.00 | % |
IV | | < 3.00 to 1.0 but > 2.00 to 1.0 | | | 1.75 | % | | | 0.75 | % |
V | | < 2.00 to 1.0 | | | 1.50 | % | | | 0.50 | % |
The Amendment does not otherwise modify the terms of the existing Credit Agreement. For a description of the Credit Agreement, see Ducommun’s Current Report on Form8-K filed with the Securities and Exchange Commission on November 26, 2018, which description is incorporated herein by reference.
The foregoing description of the Amendment is not intended to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant.
See Item 1.01 above, which is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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| 10.1 | | Incremental Term Loan Lender Joinder Agreement and Additional Credit Extension Amendment, dated as of December 20, 2019, by and among Ducommun Incorporated, as Borrower, the subsidiaries of the Borrower party thereto, as Guarantors, Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer, and the lender party thereto. |
