ARMSTRONG FLOORING, INC. (NYSE:AFI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
On November 1, 2019, Armstrong Flooring, Inc. (the Company) entered into a First Amendment to Credit Agreement (the Amendment), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Bank of America, N.A., as administrative agent, collateral agent, L/C issuer and swingline lender.
The Amendment amends that certain Credit Agreement, dated as of December 31, 2018, by and among the Company, the guarantors named therein, the lenders party thereto and Bank of America, N.A., as administrative agent, collateral agent, L/C issuer and swingline lender to, among other things, decrease the size of the credit facility to $100 million, consisting of a $75 million revolving facility and a $25 million term loan facility (the Amended Credit Facility), and converts term loans outstanding in excess of $25 million to revolver borrowings.
Borrowings under the Amended Credit Facility will bear interest at a rate per annum equal to, at the Companys option, a base rate or a Eurodollar rate equal to the London interbank offered rate (LIBOR) for the relevant interest period, plus, in each case, an applicable margin determined in accordance with the provisions of the Amendment. The base rate will be the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) one month LIBOR plus 1.00%. The applicable margin for borrowings under the Amended Credit Facility will be determined based on the Companys Consolidated Net Leverage Ratio (as defined in the Amendment) and will range from 0.75% to 2.00% with respect to base rate borrowings and 1.75% to 3.00% with respect to Eurodollar rate borrowings. In addition to paying interest on outstanding principal under the Amended Credit Facility, the Company will pay a commitment fee to the lenders under the Amended Credit Facility with respect to the unutilized revolving commitments thereunder at a rate ranging from 0.15% to 0.35% depending on the Companys Consolidated Net Leverage Ratio.
The Amendment modifies a number of covenants that, among other things and subject to certain exceptions, further restrict the Companys ability and the ability of its subsidiaries to repurchase the Companys equity or pay dividends, to complete acquisitions, to make investments in foreign subsidiaries, to sell or dispose of assets and to make capital expenditures.
In addition, the Amendment also amends certain financial covenants applicable to the Company and its subsidiaries. Specifically, the Amended Credit Facility requires that the Company and its subsidiaries not:
The foregoing summary of the Amendment does not purport to be complete and is subject to and qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
On November 5, 2019, the Company issued a press release announcing its third quarter 2019 financial results. The full text of the press release is attached hereto as Exhibit 99.1.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act, except as expressly set forth by specific reference in such filing.
Effective October 31, 2019, the Management Development and Compensation Committee of the Board of Directors (the Committee) of the Company approved a retention bonus (the Retention Agreement) for the following senior executives who report directly to Michel S. Vermette, the Companys recently appointed President and Chief Executive Officer: John C. Bassett, Senior Vice President, Human Resources; Douglas B. Bingham, Senior Vice President, Chief Financial Officer and Treasurer; Brent A. Flaharty, Senior Vice President, Sales; Scott W. Hess, Senior Vice President, Chief Information Officer; and Christopher S. Parisi, Senior Vice President, General Counsel, Secretary and Chief Compliance Officer (each, an Executive), to reflect confidence in and validation of the Executive team, and to ensure continued momentum on and commitment to the Companys strategic development initiatives. The Retention Agreement includes (i) a cash bonus (the Cash Retention Bonus) payable in two installments on January 15, 2020 and October 1, 2020 (each, a Retention Date), subject to the Executives continued employment with the Company through the applicable Retention Date and (ii) a restricted stock unit grant for shares of the Companys common stock (the Equity Retention Bonus) on November 7, 2019 (the Grant Date) on the terms and conditions set forth in the applicable grant agreement, to the terms of the Companys 2016 Long-Term Incentive Plan, as amended and restated, which units shall vest in equal annual installments over three years commencing on the second anniversary of the Grant Date, subject to the Executives continued employment with the Company. Each of Mr. Bassett, Mr. Bingham, Mr. Hess, and Mr. Parisi will receive a Cash Retention Bonus of $200,000 (payable in equal installments) and an Equity Retention Bonus of 45,000 restricted stock units. Mr. Flaharty will receive a Cash Retention Bonus of $250,000 (payable in $150,000 and $100,000 installments) and an Equity Retention Bonus of 60,000 restricted stock units.
Under the terms of each Retention Agreement, the Executive will be required to repay the first installment of the Cash Retention Bonus in the event that such Executives employment is terminated prior to October 1, 2020, other than by reason of termination by the Company without Cause (as defined in the Retention Agreement).
The summary of the Retention Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the Retention Agreement, a copy of which is filed as Exhibit 10.2 and incorporated herein by reference.
Section 7 Regulation FD
On November 5, 2019, the Company issued a press release announcing that it will report its third quarter 2019 financial results via a live webcast and conference call on November 5, 2019 at 10:00 a.m. ET. The live webcast and accompanying slide presentation will be available in the Investors section of the Companys website at www.armstrongflooring.com. To participate in the call, please dial 877-407-0789 (domestic) or 201-689-8562 (international). A replay of the conference call will be available for 90 days, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13695294. The full text of the press release is attached hereto as Exhibit 99.1.
The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed filed for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
