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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 3, 2006
TECUMSEH PRODUCTS COMPANY
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(Exact name of registrant as specified in its charter)
MICHIGAN 0-452 38-1093240
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 EAST PATTERSON STREET
TECUMSEH, MICHIGAN 49286
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 423-8411
(NOT APPLICABLE)
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 3, 2006, we entered into amendments to our First Lien Credit
Agreement and Second Lien Credit Agreement that eliminated the adjusted EBITDA
covenants for the twelve months ended September 30, 2006 and modified the
covenants for future periods, as summarized below. These amendments bring us
into compliance with the Credit Agreements, as amended.
As amended, our Credit Agreements require us to achieve at least the
following levels of cumulative adjusted EBITDA for the periods specified:
PERIOD MINIMUM ADJUSTED EBITDA
October 1, 2006 through December 31, ($14,900,000)
2006
October 1, 2006 through March 31, ($8,000,000)
2007
October 1, 2006 through June 30, 2007 $21,800,000
October 1, 2006 through September $57,000,000
30, 2007
January 1, 2007 through December 31, $88,900,000
2007
The other principal features of the Credit Agreement amendments are:
o Targeted principal reductions are established for our Second Lien
indebtedness. Failing to achieve them would not be a default, but if
we do not achieve the reduction targeted for a given date, we will be
required to pay "payment-in-kind" ("PIK") fees to the Second Lien
lenders in an amount equal to a percentage of the shortfall. The
maximum amounts of PIK fees payable under this provision are $2.1
million in the third quarter of 2007, $1.5 million in the fourth
quarter of 2007, and $1.8 million in the first quarter of 2008.
o Our revolving credit borrowing capacity under the First Lien Credit
Agreement is reduced by $15 million for the foreseeable future.
o Failing to make a required payment on our Brazilian subsidiary's
separate loans will not be a default under these Credit Agreements
until 90 days after such failure to pay unless during the 90-day
period a Brazilian lender takes legal action to collect and the action
is not stayed within ten days. We are in discussions with the
Brazilian lenders regarding the restructuring of the Brazilian loans
and most, but not all, of the Brazilian lenders have agreed not to
take legal action to collect their debts, which agreement expires
November 15, 2006. The amended Credit Agreements continue to place
significant constraints on our ability to support our Brazilian
subsidiary's debt and may prevent us from making payments that come
due on and after November 15, 2006. If we do not make payments when
due, the affected Brazilian lenders may institute legal actions, and
if they do, we do not know whether it would be possible to stay the
actions within ten days so as to prevent a default under the First and
Second Lien Credit Agreements.
o We paid the First and Second Lien lenders approximately $2.5 million
in cash amendment fees.
For more detailed information about the amendments' terms, please see the
copies filed as exhibits to this report.
We are currently negotiating with another group of lenders to provide us a
new credit facility that would replace our existing Second Lien Credit
Agreement, as amended. There can be no assurance that we will succeed in
obtaining this new credit facility.
ITEM 7.01 REGULATION FD DISCLOSURE.
On November 6, 2006, we issued a press release announcing that we were
postponing our quarterly earnings release and the related conference call, that
we planned to delay filing our third quarter Form 10-Q until November 14, 2006,
and that we had signed the amendments described above. A copy of the press
release is furnished as an exhibit to this report.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are filed or furnished with this report:
Exhibit No. Description
4.1 Amendment No. 2 to First Lien Credit Agreement dated November 3, 2006 by and among
Tecumseh Products Company and certain Lenders and Issuers listed therein and
Citicorp USA, Inc. as Administrative Agent and Collateral Agent (Note: Portions of
this exhibit have been omitted pursuant to a request for confidential treatment
and have been filed separately with the Securities and Exchange Commission.)
4.2 Amendment No. 2 to Second Lien Credit Agreement dated November 3, 2006 by and
among Tecumseh Products Company and certain lenders listed therein and Citicorp
USA, Inc. as Administrative Agent and Collateral Agent (Note: Portions of this
exhibit have been omitted pursuant to a request for confidential treatment and
have been filed separately with the Securities and Exchange Commission.)
99.1 Press release issued November 6, 2006
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TECUMSEH PRODUCTS COMPANY
Date: November 7, 2006 By /s/ James S. Nicholson
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James S. Nicholson
Vice President, Treasurer and Chief
Financial Officer
NOTE: The information in Item 7.01 of this report and the related exhibit
(Exhibit 99.1) is not to be deemed "filed" for purposes of Section 18 of the
Exchange Act or otherwise subject to the liabilities of that section unless the
registrant specifically incorporates it by reference into a filing under the
Securities Act or the Exchange Act.
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EXHIBIT INDEX
Exhibit No. Description
4.1 Amendment No. 2 to First Lien Credit Agreement dated November 3, 2006 by and among
Tecumseh Products Company and certain Lenders and Issuers listed therein and
Citicorp USA, Inc. as Administrative Agent and Collateral Agent (Note: Portions of
this exhibit have been omitted pursuant to a request for confidential treatment
and have been filed separately with the Securities and Exchange Commission.)
4.2 Amendment No. 2 to Second Lien Credit Agreement dated November 3, 2006 by and
among Tecumseh Products Company and certain lenders listed therein and Citicorp
USA, Inc. as Administrative Agent and Collateral Agent (Note: Portions of this
exhibit have been omitted pursuant to a request for confidential treatment and
have been filed separately with the Securities and Exchange Commission.)
99.1 Press release issued November 6, 2006
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