| Item 1.01. | Entry into a Material Definitive Agreement. |
Senior Unsecured Notes
On June 20, 2024, Lincoln Electric Holdings, Inc. (the “Company”) entered into the Note Purchase Agreement (the “NPA”), by and among the Company, The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W. Harris Co., Inc., Lincoln Global, Inc. and Lincoln Electric Automation, Inc. (collectively, the “Obligors”) and the purchasers party thereto.
Pursuant to the NPA, the Company will issue $75,000,000 in aggregate principal amount of Series A senior notes (the “Series A Notes”), $75,000,000 in aggregate principal amount of Series B senior notes (the “Series B Notes”) and $400,000,000 in aggregate principal amount of Series C senior notes (the “Series C Notes” and, together with the Series A Notes and the Series B Notes, collectively, the “Notes”). The Series A Notes will be sold by the Obligors on August 22, 2024, will bear interest at a fixed rate equal to 5.55% per annum and will mature on August 22, 2029. The Series B Notes will be sold by the Obligors on August 22, 2024, will bear interest at a fixed rate equal to 5.62% per annum and will mature on August 22, 2031. The Series C Notes will be sold by the Obligors on June 20, 2024, will bear interest at a fixed rate equal to 5.74% per annum and will mature on June 20, 2034.
The proceeds of the sale of the Senior C Notes were used to repay in full all outstanding principal, accrued but unpaid interest and fees, and other amounts due and payable under the Company’s existing Credit Agreement, dated as of November 29, 2022 (the “Existing Term Loan Credit Agreement”), by and among the Company, certain subsidiaries of the Company party thereto, as borrowers, the financial institutions from time to time party thereto, as lenders, and PNC Bank, National Association. In connection with the sale of the Senior C Notes, the Existing Term Loan Credit Agreement was repaid in full and terminated.
Some or all of the Notes may be prepaid at any time and from time to time, in whole or in part, at 100% of the principal amount thereof plus accrued but unpaid interest and a prepayment penalty amount. The Company is not required to prepay any of the Notes.
The NPA contains certain customary representations and warranties, as well as certain customary affirmative, negative and financial covenants (subject to negotiated baskets and exceptions), including limitations on the ability of the Obligors and their subsidiaries to grant liens and other encumbrances. The NPA also contains covenants that restrict or limit certain activities, including, but not limited to, limitations on certain fundamental changes, certain asset dispositions, distributions and transactions with affiliates. The NPA requires the Borrowers to regularly provide certain financial information to the holders of the Notes and to maintain a maximum net leverage ratio and a minimum interest coverage ratio. The NPA contains various events of default, including, but not limited to, payment defaults, breaches of representations and warranties, noncompliance with covenants and bankruptcy related events. If certain of these or other events of default occur, the Notes and accrued but unpaid interest may be declared due and immediately payable.
The foregoing summary of the NPA and the Notes is qualified in its entirety by reference to the NPA, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Senior Unsecured Revolving Credit Agreement
On June 20, 2024, the Company entered into the Credit Agreement (the “New Credit Agreement”), by and among the Company, The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W. Harris Co., Inc., Lincoln Global, Inc. and Lincoln Electric Automation, Inc. (collectively, the “Borrowers”), the financial institutions from time to time party thereto, as lenders, PNC Bank, National Association, as lead administrative agent, and KeyBank, National Association, as co-administrative agent. The New Credit Agreement provides for a revolving credit facility in a maximum principal amount of $1,000,000,000, has a term of five years with a maturity date of June 20, 2029 and may be increased, subject to certain conditions, by an additional amount up to $300,000,000. The interest rate on borrowings is based on Term SOFR plus a spread based on the Company’s net leverage ratio.
The New Credit Agreement replaces the Company’s existing Second Amended and Restated Credit Agreement, dated as of April 23, 2021 (the “Existing Revolving Credit Agreement” and, together with the Existing Term Loan Credit Agreement, collectively, the “Existing Credit Agreements” and each individually, an “Existing Credit Agreement”), by and among the Company, certain subsidiaries of the Company party thereto, as borrowers, the financial institutions from time to time party thereto, as lenders, and KeyBank National Association. Effective June 20, 2024, the Existing Revolving Credit Agreement was terminated. At the time of termination, there were no outstanding borrowings.
The New Credit Agreement contains certain customary representations and warranties, as well as certain customary affirmative, negative and financial covenants for credit facilities of this type (subject to negotiated baskets and exceptions), including limitations on the Borrowers and their subsidiaries with respect to liens, distributions, certain fundamental changes, certain dispositions of assets and transactions with affiliates. The New Credit Agreement requires the Borrowers to regularly provide certain financial information to the lenders thereunder and to maintain a maximum net leverage ratio and a minimum interest coverage ratio. The New Credit Agreement contains various events of default, including, but not limited to, payment default, breaches of representations and warranties, noncompliance with covenants and bankruptcy related events. If certain of these or other events of default occur, the outstanding amount of obligations of the Borrowers owing under the New Credit Agreement may be declared due and immediately payable.
