| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 17, 2021, Universal Stainless & Alloy Products, Inc. (the “Company”) entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement (the “New Credit Agreement”), by and among the Company, the other Borrowers (as defined in the New Credit Agreement) party thereto, the Guarantors (as defined in the New Credit Agreement) party thereto from time to time, PNC Bank, National Association, as administrative agent and co-collateral agent (the “Agent”), Bank of America, N.A., as co-collateral agent (“Bank of America”), the Lenders (as defined in the New Credit Agreement) party thereto from time to time and PNC Capital Markets LLC, as sole lead arranger and sole bookrunner (“PNC Capital Markets”). The New Credit Agreement provides for a senior secured revolving credit facility in an aggregate principal amount not to exceed $105.0 million (the “Revolving Credit Facility”) and a senior secured term loan facility relating to a term loan (the “Term Loan”) in the amount of $15.0 million (together with the Revolving Credit Facility, the “Facilities”). The New Credit Agreement also provides for a letter of credit sub-facility not to exceed $10.0 million and a swing loan sub-facility not to exceed $10.5 million, subject to adjustment in accordance with the terms of the New Credit Agreement.
The Facilities, which expire on March 17, 2026 (the “Expiration Date”), are collateralized by a first lien in substantially all of the assets of the Company and its subsidiaries, except that no real property is collateral under the Facilities other than the Company’s real property in North Jackson, Ohio. The Company, Dunkirk Specialty Steel, LLC, a wholly owned subsidiary of the Company (“Dunkirk”), and North Jackson Specialty Steel, LLC, a wholly owned subsidiary of the Company (together with the Company and Dunkirk, the “Co-Borrowers”), are co-borrowers under the Facilities. The Co-Borrowers’ respective obligations under the Facilities will be guaranteed by any future direct and indirect domestic subsidiaries of any Co-Borrower (together with the Co-Borrowers, the “Loan Parties”).
Availability under the Revolving Credit Facility is based on eligible accounts receivable and inventory, less (i) reserves established in accordance with the terms of the New Credit Agreement and (ii) any outstanding swing loans and letters of credit issued under the Facilities. The Company is required to pay a commitment fee based on the daily unused portion of the Revolving Credit Facility. To the extent not previously paid, any amounts owed under the Revolving Credit Facility will become due and payable in full on the Expiration Date.
With respect to the Term Loan, the Co-Borrowers collectively will pay quarterly installments of principal of approximately $535,714.29, plus accrued and unpaid interest, on the first day of each fiscal quarter beginning on July 1, 2021. To the extent not previously paid, the Term Loan will become due and payable in full on the Expiration Date.
Amounts outstanding under the Facilities, at the Company’s option, will bear interest at either (i) a base rate determined by reference to the base commercial lending rate of the Agent as publicly announced to be in effect from time to time and (ii) a LIBOR rate determined in accordance with the terms of the New Credit Agreement. In each case, an applicable margin based on the Company’s average undrawn availability, as calculated in accordance with the terms of the New Credit Agreement, will be added to the interest rate elected by the Company.
The New Credit Agreement contains customary affirmative and negative covenants, including limitations with respect to indebtedness, liens, investments, dividends, mergers and acquisitions, dispositions of assets, transactions with affiliates and capital expenditures. If (i) an event of default or a default under the New Credit Agreement has occurred or (ii) the undrawn availability under the
