ITEM 1.01 – ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Please see the discussion set forth in Item 2.03, “Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant,” of this Current Report on Form 8-K, which discussion is incorporated by reference into this Item 1.01.
ITEM 2.03 – CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
On October 7, 2022, ArcBest Corporation (the “Company”) amended and restated its existing revolving credit facility (the “Credit Facility”) pursuant to a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) among the Company and certain of its subsidiaries that become party thereto from time to time, as borrowers, U.S. Bank National Association and the other financial institutions named therein, as lenders and letter of credit issuers, and U.S. Bank National Association, as a LC issuer, swing line lender and administrative agent (“Administrative Agent”).
The Credit Agreement and related agreements have been amended to, among other things, (a) increase the Swing Line Sublimit from $25 million to $40 million, (b) extend the maturity date of the Commitments for those existing lenders willing to consent to such extension to October 7, 2027, (c) replace LIBOR-based interest pricing conventions with SOFR-based interest pricing conventions, (d) release the liens on the assets of the Company and the Company’s Material Domestic Subsidiaries (as defined in the Credit Agreement) and the pledges of equity interests in certain subsidiaries of the Company and its Material Domestic Subsidiaries, and (e) amend certain negative covenants and other terms as further set forth therein.
The Credit Facility has a five-year term and an initial maximum credit amount of $250 million at any time outstanding, including a swing line facility providing for swing line loans up to an aggregate outstanding amount of $40 million, and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate outstanding amount of $20 million. The Credit Facility will be used, among other purposes, for general corporate purposes and to fund working capital. The Credit Facility also provides the Company with the right to request additional revolving commitments or incremental term loans thereunder up to an aggregate additional amount of $125 million (the “Accordion Feature”), subject to the satisfaction of certain additional conditions provided therein.
As a result of the amendments, the Credit Facility is now an unsecured facility. However, the indebtedness under the Credit Agreement and certain other obligations owed to lenders or their affiliates are cross-guaranteed by the Company and its Material Domestic Subsidiaries.
The Credit Facility matures on October 7, 2027 (the “Termination Date”) and borrowings under the Credit Agreement can either be, at the Company’s election: (i) at the Alternate Base Rate (as defined in the Credit Agreement) plus a spread ranging from 0.125% to 1.00% or (ii) at the Adjusted Term SOFR Screen Rate (as defined in the Credit Agreement) plus a spread ranging from 1.125% to 2.00%. The applicable spread is dependent upon the Company’s Adjusted Leverage Ratio (as defined in the Credit Agreement). Interest accrued on each Base Rate Advance (as defined in the Credit Agreement) is payable in arrears on the last Business Day (as defined in the Credit Agreement) of each calendar quarter and on the Termination Date. Interest accrued on each Term SOFR Advance (as defined in the Credit Agreement) is payable on the last day of the applicable interest period, or every three months, whichever comes sooner, and on any prepayment date and the Termination Date.
The Credit Agreement contains customary covenants including, but not limited to, (i) a minimum interest coverage ratio and a maximum adjusted leverage ratio and (ii) limitations on incurrence of debt, investments, liens on assets, certain sale and leaseback transactions, transactions with affiliates, mergers, consolidations and sales of assets. The Credit Agreement also includes customary events of default, conditions, representations and warranties and indemnification provisions.
