| Item 1.01 | Entry into a Material Definitive Agreement |
On March 6, 2024, Lancaster Colony Corporation (the “Company”) entered into a new $150 million credit agreement (the “New Credit Agreement”) with the Lenders named in the New Credit Agreement and JPMorgan Chase Bank, N.A. as Administrative Agent. All capitalized terms not otherwise defined herein are defined in the New Credit Agreement.
On March 6, 2024, upon execution of the New Credit Agreement, the Company entered into an agreement with JPMorgan Chase Bank, N.A. to terminate its existing $150 million credit agreement (the “Old Credit Agreement”) dated March 19, 2020, as amended, between the Company, the Lenders party thereto (as defined in the Old Credit Agreement), and JPMorgan Chase Bank, N.A. as Administrative Agent. The Old Credit Agreement was replaced by the New Credit Agreement.
The material terms of the New Credit Agreement are substantially similar to the terms of the Old Credit Agreement.
The New Credit Agreement provides that the Company may borrow, for the five-year term of the agreement, on a revolving credit basis, up to a maximum of $150 million at any one time, with potential to expand the total credit availability to $225 million based on consent of the issuing banks and certain other conditions. All outstanding amounts under the New Credit Agreement are due and payable on March 6, 2029. Interest is variable based upon formulas tied to SOFR or an Alternate Base Rate. The Company must also pay facility fees that are tied to its then-applicable consolidated leverage ratio. Loans may be used for general corporate purposes. The Company’s obligations under the New Credit Agreement are not secured.
The New Credit Agreement contains certain restrictive covenants, including limitations on liens, asset sales and acquisitions. There are two principal financial covenants: an interest expense test that requires the Company to maintain an interest coverage ratio not less than 2.5 to 1 at the end of each fiscal quarter; and an indebtedness test that requires the Company to maintain a consolidated leverage ratio not greater than 3.5 to 1, subject to certain exceptions in the event of a Material Acquisition. The interest coverage ratio is calculated by dividing Consolidated EBIT by Consolidated Interest Expense, and the leverage ratio is calculated by dividing Consolidated Net Debt by Consolidated EBITDA.
At March 6, 2024, there were no borrowings outstanding under the New Credit Agreement.
The New Credit Agreement contains customary events of default, which would allow the Lenders to declare any outstanding obligations under the New Credit Agreement immediately due and payable.
The foregoing description of the New Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the New Credit Agreement, which is filed as Exhibit 10.1 and attached hereto.
| Item 1.02 | Termination of a Material Definitive Agreement |
The information set forth under Item 1.01 is hereby incorporated by reference into this Item 1.02.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information set forth under Item 1.01 is hereby incorporated by reference into this Item 2.03.
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