CAPSTONE TURBINE CORPORATION (NASDAQ:CPST) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry into a Material Definitive Agreement
Amended & Restated Note Purchase Agreement
On October 1, 2020 (the “Closing Date”), Capstone Turbine Corporation (the “Company”), certain subsidiaries of the company, Goldman Sachs Specialty Lending Group, L.P. (as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc.), as collateral agent (the “Collateral Agent”), and the Purchasers party thereto (the “Purchasers”) entered into an Amended & Restated Note Purchase Agreement, dated October 1, 2020 (the “A&R Note Purchase Agreement”). The A&R Note Purchase Agreement amends and restates that certain Note Purchase Agreement, as amended, dated February 4, 2019, by and among the Company, the Collateral Agent and the other parties party thereto. Under the A&R Note Purchase Agreement, the Company issued $20 million in additional senior secured notes (together with the $30 million in senior secured notes that were issued prior to the Closing Date, the “Notes”). The Notes bear interest at the Adjusted LIBO Rate (as defined in the A&R Note Purchase Agreement) plus 8.75% per annum, payable on the last day of each interest period of one-, two-, three- or six-months (but, in the case of a six-month interest period, every three-months). The entire principal amount of the Notes is due and payable on October 1, 2023 (the “Maturity Date”). The Notes do not amortize and the entire principal balance is due in a single payment on the Maturity Date.
The Company’s obligations under the A&R Note Purchase Agreement are unconditionally guaranteed by certain of the Company’s subsidiaries and secured by a lien on substantially all of the present and future property and assets of the Company and such subsidiaries, in each case, subject to customary exceptions and exclusions.
The A&R Note Purchase Agreement contains customary covenants, including, among others, covenants that restrict the Company’s ability to incur debt, grant liens, make certain investments and acquisitions, pay dividends, repurchase equity interests, repay certain debt, amend certain contracts, enter into affiliate transactions and asset sales or make certain equity issuances, and covenants that require the Company to, among other things, provide annual, quarterly and monthly financial statements, together with the related compliance certificates, maintain its property in good repair, maintain insurance and comply with applicable laws. Among other things, the covenants require the Company to expand its Rental Fleet (as defined in the A&R Note Purchase Agreement) by (i) at least 6.25 MW by the 9-month anniversary of the Closing Date, and (ii) at least 12.50 MW by the 18-month anniversary of the Closing Date. The A&R Note Purchase Agreement also includes financial covenants with respect to the Company’s consolidated liquidity and consolidated adjusted EBITDA.
The A&R Note Purchase Agreement contains customary events of default, including, among other things, payment default, bankruptcy events, cross-default breaches of covenants and representations and warranties, change of control, judgement defaults and an ownership change within the meaning of Section 382 of the Internal Revenue Code. In the case of an event of default, the Purchaser may, among other remedies, accelerate the payment of all obligations under the Additional Notes.
Any prepayment of the Notes made prior to the second anniversary of the Closing Date must be accompanied by a yield maintenance premium.
The Notes issued on the Closing Date and the related guarantees have not be registered under the Securities Act, and have been offered and sold in reliance on the exemption from the registration provided by Rule 506 of Regulation D promulgated under the Securities Act. The Notes and the related guarantees may not be offered or sold in the United States without registration or an applicable exemption from registration requirements.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the A&R Note Purchase Agreement, which is filed as Exhibit 4.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Purchase Warrant for Common Shares
On October 1, 2020, the Company entered into an Amendment No. 3 to the Purchase Warrant for Common Shares (the “Amendment No. 3”) with Special Situations Investing Group II, LLC (as successor in interest to Goldman Sachs & Co.