UFP Technologies, Inc. (“UFP” or the “Company”) entered into the following agreement in connection with the completion of its acquisition of AJR Enterprises, LLC, a Delaware limited liability company (“AJR”):
Securities Purchase Agreement
On July 1, 2024, pursuant to the terms of a Securities Purchase Agreement, dated as of July 1, 2024 (the “Purchase Agreement”), by and among AJR Enterprises, LLC, a Delaware limited liability company and its purchase price beneficiaries (collectively the “Sellers”), and the Company, the Company purchased from the Sellers all of the issued and outstanding membership interests of AJR Enterprises, LLC for an aggregate purchase price of $110 million in cash. The purchase price is subject to adjustment based upon AJR’s working capital at closing.
$4 million of the purchase price is being held in escrow to indemnify the Company against certain claims, losses and liabilities. The Purchase Agreement contains customary representations, warranties and covenants customary for transactions of this type. As part of the Securities Purchase Agreement, the Sellers as well as certain restricted parties have agreed to not compete with the Company for a period of seven years.
The above description of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
Amended and Restated Credit Agreement
On June 27, 2024, the Company, as the borrower, entered into a secured $275 million Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with certain of the Company’s subsidiaries (the “Subsidiary Guarantors”) and Bank of America, N.A., in its capacity as the initial lender, Administrative Agent, Swingline Lender and L/C Issuer, and certain other lenders from time-to-time party thereto. The Amended and Restated Credit Agreement amends and restates the Company’s prior credit agreement, originally dated as of December 22, 2001. Our new credit agreement increases the size of our credit facility, extends its maturity, changes the interest we pay should our leverage ratio exceed 3X and adds new permitted acquisitions we may close, among other things.
The credit facilities under the Amended and Restated Credit Agreement consist of a secured term loan to UFP of up to $125 million and a secured revolving credit facility, under which the Company may borrow up to $150 million. The Amended and Restated Credit Facilities mature on June 27, 2029. This maturity date is subject to acceleration and the Company could be subject to additional fees and expenses in certain circumstances should one or more events of default described in the Amended and Restated Credit Agreement occur. The proceeds of the Amended and Restated Credit Agreement may be used for general corporate purposes, including funding the acquisition of AJR Enterprises, LLC, as well as certain other permitted acquisitions.
The Company’s obligations under the Amended and Restated Credit Agreement are guaranteed by the Subsidiary Guarantors.
The Amended and Restated Credit Facilities call for interest of SOFR plus a margin that ranges from 1.25% to 2.25% or, at the discretion of the Company, the bank’s prime rate plus a margin that ranges from .25% to 1.25%. In both cases the applicable margin is dependent upon Company performance. Under the Amended and Restated Credit Agreement, the Company is subject to a minimum fixed-charge coverage financial covenant as well as a maximum total funded debt to EBITDA financial covenant. The Amended and Restated Credit Agreement contains other covenants customary for transactions of this type, including restrictions on certain payments, permitted indebtedness and permitted investments.
As of July 1, 2024, the Company had approximately $150 million in borrowings outstanding under the Amended and Restated Credit Facilities, $115 million of which was under its secured term loan and was used as consideration for the AJR acquisition and $35 million of which was under its revolving credit facility, which the Company rolled over from its former facility. As of July 1, 2024, after reducing the available amount by certain letters of credit, the Company has $114 million available to draw under its revolving credit facility. As of July 1, 2024, until December 31, 2024, the Company may draw up to an additional $10 million of borrowing under its secured term loan.
The above description of the Amended and Restated Credit Agreement is qualified in its entirety by reference to the Amended and Restated Credit Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K.
