Atkore International Group Inc. (NASDAQ:ATKR) Files An 8-K Entry into a Material Definitive Agreement
Item1.01. Entry into a Material Definitive Agreement.
On December22, 2016, Atkore International Group Inc.s indirect
wholly-owned indirect subsidiary, Atkore International, Inc.
(AII) completed the previously-announced refinancing of its first
lien term loan facility (the Existing First Lien Term Loan
Facility) and its second lien term loan facility (the Second Lien
Term Loan Facility) with an amended and restated $500.0million
first lien term loan facility maturing in December 2023 (the New
First Lien Term Loan Facility). On the same date, AII also
amended its asset-based credit facility (the Amended ABL Credit
Facility) to, among other things, (i)extend the maturity of the
Amended ABL Credit Facility to December 2021 and (ii)decrease the
interest rate margins applicable to loans under the Amended ABL
Credit Facility. We refer to these transactions, collectively, as
the Refinancing. AII used the borrowings under the New Term Loan
Facility, together with approximately $155.0million of available
cash to prepay in full (i)all loans outstanding under the
Existing First Lien Term Loan Facility and (ii)all loans
outstanding under the Second Lien Term Loan Facility, and to pay
related fees and expenses, including accrued and unpaid interest
in respect of the Existing First Lien Term Loan Facility and the
Second Lien Term Loan Facility.
Amended ABL Credit Facility
AII is the parent borrower under the credit agreement, dated
December22, 2010, as amended prior to and on December22, 2016,
among AII, UBS AG, Stamford Branch, as administrative agent and
collateral agent, Deutsche Bank AG New York Branch, as
co-collateral agent, and the other financial institutions and
lenders from time to time party thereto (the Amended ABL Credit
Agreement) providing for the Amended ABL Credit Facility in an
amount of up to $325.0million, subject to borrowing base
availability, and includes letter of credit and swingline
sub-facilities. At the option of AII, one or more wholly-owned
U.S. restricted subsidiaries of AII may act as a co-borrower
under the Amended ABL Credit Facility.
Amounts are available under the Amended ABL Credit Facility in
U.S. dollars and Canadian dollars, with other permitted
currencies to be agreed upon as necessary. In addition, subject
to certain terms and conditions, AII is entitled to request
additional asset-based revolving credit commitments under the
Amended ABL Credit Facility (including a first-in, last-out tranche) or
asset-based term loans under a new term loan facility to be
included in the Amended ABL Credit Facility, which shares in the
borrowing base, in an aggregate amount of up to
$75million.
The final maturity
of the Amended ABL Credit Facility is December22, 2021. In
addition, however, the Amended ABL Credit Agreement provides the
right for individual lenders to extend the maturity date of their
commitments and loans upon the request of AII and without the
consent of any other lender.
The borrowing base
is defined in the Amended ABL Credit Agreement as, at any time,
the sum of (i)85% of the eligible accounts receivable of each
borrower and each guarantor; plus (ii)the lesser of (x)80% of
eligible inventory of each borrower and each guarantor (other
than the parent guarantor) valued at the lower of cost (on the
first-in-first-out
basis) and fair market value and (y)85% of the net orderly
liquidation value of such eligible inventory; minus (iii)such
availability reserves as the administrative agent, in its
permitted discretion, deems appropriate at such time; minus
(iv)the outstanding principal amount of any asset-based term
loans under the Amended ABL Credit Facility described
above.
Interest Rates and
Fees
The revolving credit loans
under the Amended ABL Credit Agreement, at the option of AII,
bear interest at the following rates:
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in the case of the U.S. dollar-denominated loans, a rate equal to (i)the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period, or LIBOR rate, plus an applicable margin ranging from 1.25% to 1.75%, based on available loan commitments, or (ii)the base rate, which is the highest of (x)the corporate base rate established by the administrative agent from time to time, (y)0.50% in excess of the overnight federal funds rate and (z)the one-month LIBOR rate (adjusted for maximum reserves) plus 1.00%per annum, plus, in each case, an applicable margin ranging from 0.25% to 0.75%, based on available loan commitments; |
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in the case of Canadian dollar-denominated loans, the BA rate, defined as (i)(A)for any lender that is a Schedule I bank the average annual yield rate for Canadian dollar bankers acceptances with a duration equal to the applicable interest period that is shown on the CDOR page from time to time and (B)for any lender that is not a Schedule I bank, the BA rate for Schedule I banks, plus 0.10%per annum, plus an applicable margin ranging from 1.25% to 1.75% per annum, based on available loan commitments or (ii)the Canadian prime rate that is the higher of (x)the corporate base rate of interest established from time to time by such Schedule I bank selected by the administrative agent for the Amended ABL Credit Facility as its prime reference rate and (y)the annual rate of interest equal to the sum of the one-month BA rate in effect on such day, plus 0.75%per annum, plus an applicable margin ranging from 0.25% to 0.75% per annum. |
Available loan commitments is
defined in the Amended ABL Credit Agreement as the remainder of
(a)the lesser of (x)the then applicable borrowing base and (y)the
then effective commitments under the Amended ABL Credit Facility
over (b)the sum of (i)all revolving credit loans (including
swingline loans) and (ii)all amounts outstanding under letters of
credit at such time.
The Amended ABL Credit
Facility bears a commitment fee, payable quarterly in arrears, of
0.25%per annum if the utilization of the Amended ABL Credit
Facility is greater than 50% or 0.375%per annum if such
utilization is equal to or less than 50%. The Amended ABL Credit
Facility also bears customary letter of credit
fees.
Prepayments
If, at any time, the aggregate
amount of outstanding revolving credit loans (including letters
of credit outstanding) exceeds (a)the lesser of (x)the then
applicable borrowing base and (y)the then effective commitments
under the Amended ABL Credit Facility, prepayments of the
revolving credit loans (and/or the cash collateralization of
letters of credit) will be required in an amount equal to such
excess, without commitment reduction and without penalty, but
subject to customary breakage costs in the case of LIBOR and BA
rate loans.
After the occurrence and
during the continuance of a Dominion Event (which is defined in
the Amended ABL Credit Agreement as (a)the period from the date
specified availability (as defined below) shall have been less
than the greater of (A)$22million and (B)10.0% of the lesser of
(x)the then applicable borrowing base and (y)the then effective
commitments under the Amended ABL Credit Facility to the date
specified availability shall have been in excess of such
threshold for 30 consecutive calendar days, or (b)upon the
occurrence of one or more events of default, the period that such
events of default shall be continuing), all amounts deposited in
the core concentration account controlled by the administrative
agent will be applied on a daily basis to the outstanding loan
balances under the Amended ABL Credit Facility and certain other
secured obligations then due and owing.
At the option of the borrower
the unutilized portion of the commitments under the Amended ABL
Credit Facility may be permanently reduced and the revolving
credit loans under the Amended ABL Credit Facility may be
voluntarily prepaid, in each case subject to requirements as to
minimum amounts and multiples, at any time in whole or in part
without premium or penalty, except that any prepayment of LIBOR
and BA rate revolving credit loans other than the last day of the
applicable interest period will be subject to customary breakage
costs.
Specified availability is
defined in the Amended ABL Credit Agreement as the sum of (i)the
aggregate available loan commitments (as defined above) of all
lenders, plus (ii)any cash or cash equivalents against which the
lenders have a security interest, plus (iii)the amount by which
the borrowing base exceeds the aggregate amount of the
commitments.
Guarantee;
Security
All obligations under the
Amended ABL Credit Facility are guaranteed by Atkore
International Holdings Inc. (AIH), Atkore International Group
Inc.s direct wholly-owned subsidiary, and each direct and
indirect wholly-owned material U.S. restricted subsidiary of AII,
other than the subsidiary borrowers and certain excluded
subsidiaries.
All obligations of each
borrower and each guarantor are secured by the
following:
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A perfected security interest in all present and after-acquired accounts receivable, inventory and other current assets and all proceeds thereof, including cash, cash equivalents, deposit accounts, securities accounts, investment accounts, instruments, chattel paper, general intangibles (excluding, for the avoidance of doubt, trademarks, trade names and other intellectual property), letters of credit, insurance proceeds and investment property in each case arising from any such accounts receivable, inventory and other current assets and all books and records and related data processing software relating to, or arising from, any of the foregoing, subject to customary exceptions, which security interest is senior to the security interest in the foregoing assets securing the New First Lien Term Loan Facility (the ABL Priority Collateral); and |
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a perfected security interest in substantially all other tangible and intangible assets of each borrower and each guarantor, including the capital stock of AII and the capital stock of each U.S. subsidiary of each borrower and each guarantor, and 65% of the capital stock of any non-U.S. subsidiary held directly by any borrower or any guarantor, subject to customary exceptions, which security interest is junior to the security interest in the foregoing assets securing the New First Lien Term Loan Facility (the Term Loan Priority Collateral). |
The Amended ABL Credit
Facility does not generally require the security interest in
deposit accounts owned by AII and its subsidiaries to be
perfected, except for certain concentration accounts into which
cash is swept on a regular basis.
The respective rights of the
Amended ABL Credit Facility lenders and the New First Lien Term
Loan Facility lenders in the ABL Priority Collateral and the Term
Loan Priority Collateral are governed by an intercreditor
agreement previously entered into by the collateral agent for the
Amended ABL Credit Facility and the collateral agents for the New
First Lien Term Loan Facility.
Covenants,
Representations and Warranties
The Amended ABL Credit
Facility contains customary representations and warranties and
customary affirmative and negative covenants. The negative
covenants are limited to the following: limitations on
indebtedness, dividends and distributions, investments,
acquisitions, prepayments or redemptions of subordinated
indebtedness, amendments of subordinated indebtedness,
transactions with affiliates, asset sales, mergers,
consolidations and sales of all or substantially all assets,
liens, negative pledge clauses, changes in fiscal periods,
changes in line of business, changes in charter documents and
hedging transactions. The negative covenants are subject to the
customary exceptions and also permit the payment of dividends and
distributions, investments, permitted acquisitions and payments
or redemptions of subordinated indebtedness upon satisfaction of
a payment condition. The payment condition is deemed satisfied
upon specified availability and 30-day specified availability
exceeding agreed upon thresholds of (i)15.0% for dividends and
distributions, (ii)12.5% for investments and permitted
acquisitions, (iii)12.5% for redemptions of subordinated
indebtedness, (iv)12.5% for any merger or consolidation and
(v)10.0% for any asset sale and, in certain cases, the absence of
a default or event of default and pro forma compliance with a
fixed charge coverage ratio of 1.0 to 1.0.
There are no financial
covenants included in the Amended ABL Credit Agreement, other
than a springing minimum fixed charge coverage ratio of at least
1.0 to 1.0, which will be tested only when specified availability
(as defined above) is less than the greater of (A)$22.0million
and (B)10.0% of the lesser of (x)the then applicable borrowing
base and (y)the then effective commitments under the Amended ABL
Credit Facility, and continuing until such time as available loan
commitments have been in excess of such threshold for a period of
30 consecutive days.
Events of
Default
Events of default under the
Amended ABL Credit Agreement are limited to nonpayment of
principal when due, nonpayment of interest, fees or other
amounts, inaccuracy of representations or warranties in any
material respect, violation of other covenants, cross-default to
other material debt, certain bankruptcy or insolvency events,
certain Employee Retirement Income Security Act of 1974 (ERISA)
events, certain material judgments, actual or asserted invalidity
of material guarantees or security interests in excess of
$10million, subject to a grace period, actual or asserted
invalidity of any loan document (other than the Amended ABL
Credit Agreement or any of the material guaranty or security
interests), and a change of control.
New First Lien Term
Loan Facility
AII is the borrower under the
first lien term loan facility, dated April9, 2014, as amended and
restated on December22, 2016, among AII, the lenders from time to
time party thereto and Deutsche Bank AG New York Branch, as
administrative agent and collateral agent (the New First Lien
Credit Agreement) providing for the New First Lien Term Loan
Facility in an original principal amount of $500.0million. The
New First Lien Term Loan Facility matures on December22, 2023 and
amortizes at a rate of 1.00%per annum. In addition, the New First
Lien Credit Agreement provides the right for individual lenders
to extend the maturity date of their loans upon AIIs request and
without the consent of any other lender.
Subject to certain conditions
and without the consent of the then existing lenders (but subject
to the receipt of commitments), the New First Lien Term Loan
Facility may be expanded (or a new term loan facility, revolving
credit facility or letter of credit facility added) by up to
(i)$235.0million plus (ii)an unlimited amount as will not cause
the first lien net leverage ratio, after giving effect to the
incurrence of such additional amount to exceed 3.75:1.00. Amounts
available to clause (ii)of the preceding sentence may be utilized
prior to amounts under clause (i).
Interest Rates and
Fees
The loans under the New First
Lien Term Loan Facility bear interest at a rate equal to
(i)LIBOR, plus 3.00%, or (ii)the base rate, which will be the
highest of (x)the corporate base rate established by the
administrative agent as its prime rate, (y)0.50% in excess of the
overnight federal funds rate and (z)one-month LIBOR (adjusted for
maximum reserves) plus 1.00%per annum, plus, in each case, 2.00%.
The loans made under the New First Lien Term Loan Facility are
subject to a LIBOR floor of 1.00%.
Prepayments
The New First Lien Term Loan
Facility is subject to mandatory prepayment in an amount equal to
(a)50% of excess cash flow (as defined in the New First Lien
Credit Agreement), with a reduction to zero based upon
achievement of a specified first lien net leverage ratio, (b)50%
of the net cash proceeds received from the incurrence of
indebtedness by AII or any of its restricted subsidiaries (other
than indebtedness permitted under the New First Lien Term Loan
Facility, excluding certain specified refinancing indebtedness),
and (c)50% of the net cash proceeds of all non-ordinary course
asset sales or other dispositions of property by AII and its
restricted subsidiaries (including certain insurance and
condemnation proceeds) in excess of $20.0million, with a
reduction to 50% based upon achievement of a specified first lien
net leverage ratio and subject to the right of AII and its
restricted subsidiaries to reinvest such proceeds within a
specified period of time, and other exceptions.
Voluntary prepayments of
borrowings under the New First Lien Credit Facility are permitted
at any time, subject to minimum principal amount requirements,
without premium or penalty, subject to customary LIBOR breakage
costs.
Guarantee;
Security
All obligations under the New
First Lien Term Loan Facility are guaranteed by AIH and each
current and future direct and indirect wholly-owned U.S.
restricted subsidiary of AII, other than certain excluded
subsidiaries.
All obligations of each
borrower and each guarantor are secured by the
following:
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A perfected security interest in the ABL Priority Collateral, which security interest is junior to the security interest in the ABL Priority Collateral securing the Amended ABL Credit Facility; and |
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a perfected security interest in substantially the Term Loan Priority Collateral, which security interest is senior to the security interest in the Term Loan Priority Collateral securing the Amended ABL Credit Facility. |
The respective rights of the
New First Lien Term Loan Facility lenders and the Amended ABL
Credit Facility lenders in the ABL Priority Collateral and the
Term Loan Priority Collateral are governed by an intercreditor
agreement previously entered into by the collateral agent for the
Amended ABL Credit Facility and the collateral agent for the New
First Lien Term Loan Facility.
Covenants,
Representations and Warranties
The New First Lien Term Loan
Facility contains customary representations and warranties and
customary affirmative and negative covenants. The negative
covenants include restrictions on, among others:
| the incurrence of additional indebtedness and liens; |
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dividends and other distributions or the purchase, redemption or retirement of capital stock; |
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the purchase, redemption or retirement of certain junior indebtedness; |
| loans and investments; |
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entering into agreements that limit AIIs or its subsidiaries ability to pledge assets, make distributions or loans to AII or transfer assets to AII; |
| asset sales; |
| affiliate transactions; |
| consolidations, mergers or sale of substantially all assets; |
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voluntary payments or modifications of junior indebtedness; and |
| alterations of the business conducted. |
The New First Lien Term Loan
Facility does not contain financial maintenance
covenants.
Events of
Default
The New First Lien Term Loan
Facility includes customary events of default, including events
of default relating to the nonpayment of principal or interest
when due, inaccuracy of representations or warranties in any
material respect, violation of covenants, default under other
loan document of the New First Lien Term Loan Facility,
cross-default to other material debt, certain bankruptcy or
insolvency events, certain ERISA events, certain material
judgments, actual or asserted invalidity of guarantees, certain
other loan documents or liens, asserted invalidity of any
intercreditor agreement and a change of control, in each case
subject to customary thresholds, notice and grace period
provisions.
The foregoing descriptions of
the Amended ABL Credit Agreement and the New First Lien Credit
Agreement are qualified in their entirety by reference to the
complete terms and conditions of such agreements filed as Exhibit
10.1 and Exhibit 10.2 respectively, and incorporated herein by
reference.
Item1.02. Termination
of a Material Definitive Agreement.
In connection with the
prepayment of all outstanding loan under the Second Lien Term
Loan Facility on December22, 2016, the Second Lien Credit
Agreement, dated as of April9, 2014, as amended, among AII, the
several banks and other financial institutions from time to time
party thereto, and Deutsche Bank AG New York Branch, as
administrative agent for the lenders thereunder and as collateral
agent for the secured parties, was terminated and all obligations
of AII and the other loan parties under the Second Lien Term Loan
Facility were released, discharged and satisfied in
full.
Item2.03. Creation of
a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a
Registrant.
The information contained in
Item 1.01 concerning AIIs direct financial obligations to the
Refinancing is hereby incorporated herein by
reference.
Item9.01.Financial
Statements and Exhibits.
(d)Exhibits
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ExhibitNo. |
DescriptionofExhibit |
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| 10.1 |
Fifth Amendment to Credit Agreement and Third Amendment to and Reaffirmation of Guarantee and Collateral Agreement, dated as of December22, 2016, among Atkore International, Inc., the several banks and other financial institutions from time to time parties thereto, UBS AG, Stamford Branch, as administrative agent for the lenders and as collateral agent for the secured parties, the other loan parties party thereto and the several banks and other financial institutions party thereto. |
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| 10.2 |
Second Amendment to First Lien Credit Agreement and First Amendment to and Reaffirmation of Guarantee and Collateral Agreement, dated as of December22, 2016, among Atkore International, Inc., Deutsche Bank AG New York Branch, as administrative agent, the other loan parties party thereto and the several banks and other financial institutions party thereto. |
About Atkore International Group Inc. (NASDAQ:ATKR)