Item 1.01.Entry Into a Material Definitive Agreement.
Amendment to Credit Agreement
On March 31, 2021, Matson, Inc. (“Matson” or the “Company”) entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A. as Agent, Swing Line Lender and L/C Issuer, the lenders party thereto, and First Hawaiian Bank, as L/C Issuer. The Credit Agreement amends and restates that certain Amended and Restated Credit Agreement dated as of June 29, 2017 (as amended, supplemented or otherwise modified prior to the Closing Date, the “Prior Credit Agreement”). All obligations of the Company under the Credit Agreement are guaranteed by Matson’s principal operating subsidiary Matson Navigation Company, Inc., and by certain other subsidiaries.
The Credit Agreement has a five-year maturity and provides loan commitments to the Company as of the Closing Date in the aggregate amount of $650,000,000, with an uncommitted $250,000,000 increase option. The Credit Agreement provides for amendments to certain covenants and other terms set forth in the Prior Credit Agreement, including (i) amending the pricing grid to provide for pricing ranging from, at the Company’s election, LIBOR plus a margin between 1.00% and 1.75% depending on the Company’s consolidated net leverage ratio, or base rate plus a margin between 0.00% and 0.75% depending on the Company’s consolidated net leverage ratio; (ii) reducing the maximum permitted consolidated leverage ratio to 3.50 to 1.0, with an option for a one-time increase to 4.0 to 1.0 in connection with a material acquisition; (iii) removing certain additional limitations on stock redemptions and repurchases, sale leaseback transactions and asset sales during the period from March 31, 2020 through and including December 30, 2021 that were added in March 2020; and (iv) removing certain additional limitations on incurrence of priority debt through December 21, 2027 that were added in March 2020. The Company may prepay any amounts outstanding under the Credit Agreement without premium or penalty, in accordance with the Credit Agreement. The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates. The Credit Agreement also contains customary events of default. Customary fees were payable in connection with the closing of the Credit Agreement. On the Closing Date, the total loan balance was $25,000,000 and the amount of outstanding letters of credit was $8,110,777.
The foregoing description is qualified in its entirety by the terms and conditions set forth in the Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Amendments to Existing Private Placement Facilities
On March 31, 2021, Matson and the holders of notes party thereto entered into amendments (collectively, the “2021 NPA Amendments”) to each of (i) the Third Amended and Restated Note Purchase Agreement and Private Shelf Agreement dated as of September 14, 2016, among Matson and the holders of the notes issued thereunder, as amended; and (ii) the Note Purchase Agreement dated December 21, 2016 among Matson and the holders of the notes issued thereunder, in each case as amended prior to such date (the “Existing Note Purchase Agreements,” and the Existing Note Purchase Agreements, as so amended, the “Note Purchase Agreements”).
The 2021 NPA Amendments provide for amendments to certain covenants and other terms, including (i) eliminating the Leverage Relief Period and associated quarterly interest enhancement payments that were added in March 2020; (ii) removing certain other fees and increases to interest rate through December 31, 2021 and thereafter that were added in March 2020; (iii) reducing the maximum permitted consolidated leverage ratio to 3.50 to 1.0, with an option for a one-time increase to 4.0 to 1.0 in connection with a material acquisition, with potential interest enhancement payments if leverage is over 3.25 to 1.0; (iv) removing certain additional limitations on stock redemptions and repurchases, sale leaseback transactions and asset sales during the period from March 31, 2020 through and including December 30, 2021 that were added in March 2020; and (v) removing certain additional limitations on incurrence of priority debt through December 21, 2027 that were added in March 2020. Customary fees were payable in connection with the closing of the 2021 NPA Amendments.
The foregoing description is qualified in its entirety by the terms and conditions set forth in the 2021 NPA Amendments, copies of which are filed as Exhibits 10.2 to 10.3 to this Current Report on Form 8-K and are incorporated herein by reference.
