Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Credit Agreement
On September 9, 2024, Advanced Energy Industries, Inc. (the “Company”) and material domestic subsidiaries of the Company acting as guarantors (the “Guarantors”) entered into Amendment No. 4 to the Credit Agreement (the “Amendment”), which amended its existing credit agreement, dated as of September 10, 2019 (as amended by Amendment No. 1, dated September 9, 2021, Amendment No. 2, dated March 31, 2023, and Amendment No. 3, dated September 7, 2023, the “Credit Agreement”), by and among the Company, the Guarantors, the banks and financial institutions listed as lenders in the Credit Agreement, and Bank of America, N.A., as administrative agent. Prior to giving effect to the Amendment, the Credit Agreement provided aggregate financing of $600.0 million, consisting of a $400.0 million senior unsecured term loan facility maturing on September 9, 2026 (the “Term Loan Facility”) and a $200.0 million senior unsecured revolving facility maturing on September 9, 2026 (the “Revolving Facility”).
The Amendment (a) increases the lenders’ commitment under the Revolving Facility by $400.0 million for a total of $600.0 million in aggregate, all of which is currently available, (b) adds Wells Fargo Bank, National Association as a lender, (c) refreshes the accordion feature allowing the Company to increase the size of the Term Loan Facility or the Revolving Facility by $250.0 million in the aggregate, subject to certain conditions, and (d) provides for other customary changes as more fully set forth in the Amendment. There are no changes to the interest rates, maturities, and covenants of the Credit Agreement, and except as set forth in the Amendment, all terms and conditions of the Credit Agreement remain in place.
Consistent with the Amendment, the Company concurrently prepaid in full the $345.0 million aggregate principal amount outstanding under the Term Loan Facility, including all accrued and unpaid interest thereon, using cash on hand. Following the prepayment, the only outstanding debt remaining on the Company’s consolidated balance sheet is the $575.0 million aggregate principal amount of 2.50% convertible senior notes due 2028. Further, the interest rate swap contracts which the Company previously entered into relative to the Term Loan Facility expired on September 10, 2024.
The Amendment and concurrent repayment of the Term Loan Facility leverage the Company’s available cash on hand to reduce net interest expense. In addition, the amended structure preserves the terms of the existing Credit Agreement, increases overall financing capacity and enables flexibility to fund growth, share repurchase and other corporate needs.
The foregoing descriptions of the Amendment and Credit Agreement are not complete and are qualified in their entirety by reference to the full text of the Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
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 of this Current Report on Form 8-K is incorporated herein by reference.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
