Blonder Tongue Laboratories, Inc. (NYSEMKT:BDR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement |
On December 28, 2016, Blonder Tongue Laboratories, Inc. (the
“Company”), R. L. Drake Holdings, LLC, a wholly-owned
subsidiary of the Company (“RLD” and with the Company,
collectively, “Borrower”), Blonder Tongue Far East, LLC, a
wholly-owned subsidiary of the Company (“Blonder Tongue Far
East”), as a guarantor and a credit party, and Sterling National
Bank (as lender and as administrative agent, “Sterling”)
entered into a Loan and Security Agreement (the “Loan
Agreement”).
The Loan Agreement provides the Company with a credit facility in
an aggregate amount of $8,500,000 consisting of a $5,000,000
asset-based revolving line of credit and a $3,500,000 amortizing
term loan. The credit facility matures in December 2019. Interest
on the revolving line of credit is variable, based upon the
30-day LIBOR rate (currently 0.76%) plus a margin of 4.00%.
Interest on the term loan also is variable, based upon the 30-day
LIBOR rate (currently 0.76%) plus a margin of 4.50%. The term
loan will amortize at the rate of $19,444 per month. All
outstanding indebtedness under the Loan Agreement is secured by
all of the assets of the Company and its subsidiaries, and is
guaranteed by Blonder Tongue Far East.
The Loan Agreement contains customary covenants, including
restrictions on the incurrence of additional indebtedness,
encumbrances on Borrower’s assets, the payment of cash dividends
or similar distributions, the repayment of any subordinated
indebtedness and the sale or other disposition of Borrower’s
assets. In addition, the Company must maintain (i) a fixed charge
coverage ratio of not less than 1.1 to 1.0 for any fiscal month
(determined as of the last day of each fiscal month on a rolling
twelve-month basis, as calculated for the Company and its
consolidated subsidiaries) and (ii) a leverage ratio of not more
than 2.0 to 1.0 for any fiscal month (determined as of the last
day of each fiscal month, as calculated for the Company and its
consolidated subsidiaries). Events of default under the Loan
Agreement include Borrower’s payment defaults, material
misrepresentations, uncured breaches of covenants, cross defaults
with certain other indebtedness, bankruptcy and insolvency
events, changes of control and the occurrence of certain material
adverse events.
A portion of the proceeds received by the Company under the Loan
Agreement has been used to repay all amounts outstanding under
the Company’s existing Revolving Credit, Term Loan and Security
Agreement with Santander Bank, N.A. (as amended, the “Santander
Agreement”), which was terminated on December 28, 2016. The
Santander Agreement was scheduled to expire December 31, 2016.
Other proceeds may be used for working capital in the ordinary
course of Borrower’s business.
Contemporaneously with the entry into the Loan Agreement, (i) the
Company and Sterling also entered into a Mortgage, Assignment of
Leases and Rents, Security Agreement, Fixture Filing and
Financing Statement (the “Mortgage”), to which the obligations
of the Borrowers under the Loan Agreement are secured by a
mortgage on the Company’s headquarters property in Old Bridge,
New Jersey, (ii) Blonder Tongue Far East entered into a guaranty
agreement (the “Guaranty Agreement”) with Sterling whereby in
the event of default by Borrower, Blonder Tongue Far East agrees
to perform under the Loan Agreement, and (iii) Borrower, Sterling
and the holders of the Company’s outstanding senior subordinated
convertible indebtedness, entered into a subordination agreement
(the “Subordination Agreement”), to which such holders
acknowledged and agreed that their rights to payment and the
priority of their liens, will be subordinate to the rights of
Sterling and the lenders under the Loan Agreement.
The foregoing summaries of the Loan Agreement, the Guaranty
Agreement, the Subordination Agreement, and the Mortgage are
not complete and are qualified in their entirety by reference
to the full text of those agreements, which are attached hereto
as Exhibit 10.1, Exhibit 10.3 , Exhibit 10.4, and Exhibit 10.5,
respectively, and are incorporated herein by reference.
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Item 1.02 |
Termination of a Material Definitive Agreement |
As described in Item 1.01 above, in connection with the entry
into the Loan Agreement, on December 28, 2016, the Company
repaid all amounts outstanding under the Santander Agreement
and terminated such agreement.
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Item 2.03 |
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 above is hereby
incorporated by reference into this Item 2.03. Upon a default
under the Loan Agreement, including the non-payment of
principal or interest, the obligations of Borrower may be
accelerated and Sterling may pursue its rights under the Loan
Agreement, the Guaranty Agreement, the Uniform Commercial Code
and any other applicable law or in equity.
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Item 8.01 |
Other Events |
On January 3, 2017, the Company issued a press release
regarding the entry into the Loan Agreement. A copy of the
press release is attached hereto as Exhibit 99.1 to this
Current Report on Form 8-K and incorporated by reference
herein.
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Item 9.01 |
Financial Statements and Exhibits |
(d) Exhibits. The following exhibits are filed herewith:
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Exhibit No. |
Description |
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10.1 |
Loan and Security Agreement dated as of December 28, 2016 by and between Blonder Tongue Laboratories, Inc. and R. L. Drake Holdings, LLC, as Borrowers, Blonder Tongue Far East, LLC, as a Guarantor and a Credit Party and Sterling National Bank, as Administrative Agent and as a Lender, and the other Lenders from time to time party thereto. |
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10.2 |
Form of Term RE Note dated December 28, 2016. |
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10.3 |
Guaranty Agreement effective as of December 28, 2016 by and between Sterling National Bank, as administrative and collateral agent for the Lender Parties identified therein, and Blonder Tongue Far East, LLC, as Guarantor. |
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10.4 |
Subordination Agreement dated as of December 28, 2016 by and between Sterling National Bank, as administrative and collateral agent for the Senior Lenders identified therein, and the Junior Creditor identified therein. |
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10.5 |
Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement made as of December 28, 2016 by Blonder Tongue Laboratories, Inc. to Sterling National Bank, as administrative agent for the benefit of itself and the other Lender Parties identified therein. |
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99.1 |
Press Release dated January 3, 2017. |
About Blonder Tongue Laboratories, Inc. (NYSEMKT:BDR)
Blonder Tongue Laboratories, Inc. (Blonder Tongue), along with its subsidiary, R. L. Drake Holdings, LLC (RLD), is a technology-development and manufacturing company. The Company delivers a range of products and services to the cable entertainment and media industry. Its products are deployed in a list of locations, including lodging/hospitality, multi-dwelling units/apartments, broadcast studios/networks, universities/schools, healthcare/hospitals and airports. Blonder Tongue’s products are divided into three categories: Digital Video Headend, Analog Video Headend and Hybrid-Fiber Coax (HFC) Distribution. The Digital Video Headend products (including encoders) are used by a system operator for acquisition, processing, compression, encoding and management of digital video. The Analog Video Headend products are used by a system operator for signal acquisition, processing and manipulation. The HFC Distribution products are used to transport signals from the headend to their destination. Blonder Tongue Laboratories, Inc. (NYSEMKT:BDR) Recent Trading Information
Blonder Tongue Laboratories, Inc. (NYSEMKT:BDR) closed its last trading session down -0.020 at 0.530 with 10,002 shares trading hands.
