INNOPHOS HOLDINGS, INC. (NASDAQ:IPHS) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement |
On December22, 2016, Innophos Holdings, Inc. and certain of its
directly and/or indirectly wholly-owned subsidiaries
(collectively, the Company) entered into a Credit Agreement (the
Credit Agreement) with a group of lenders (collectively, the
Lenders), including Wells Fargo Bank, National Association, as
administrative agent, and Bank of America, N.A. and SunTrust
Bank, as co-syndication agents.
The Credit Agreement provides the Company a revolving line of
credit from the Lenders of up to $450.0million, including a
$20.0million letter of credit sub-facility, all maturing on
December22, 2021. Interest accruing on amounts borrowed under the
revolving line is based on an applicable margin over LIBOR
(London Interbank Offered Rate) or bank base rate, ranging from
100 to 225 basis points for LIBOR and 0 to 125 basis points for
base rate loans, in each case with loan period and interest
alternative as chosen by the Company, which margin is adjusted
quarterly depending on a Total Leverage Ratio (as computed under
the Credit Agreement) for the period in question. Commitment fees
on the unused revolving line range from 12.5 to 37.5 basis
points, depending on Total Leverage Ratio (as computed under the
Credit Agreement) for the period in question. The initial
applicable margin for LIBOR based loans, base rate loans and the
commitment fee are 175, 75 and 27.5 basis points, respectively.
The Credit Agreement also provides for possible additional
revolving indebtedness under an incremental facility of up to
$150.0million (for an aggregate revolving capacity up to $600.0
million) upon future request by the Company to existing Lenders
(and depending on their consent) or from other willing financial
institutions invited by the Company and reasonably acceptable to
the administrative agent to join in the Credit Agreement. This
revolving credit facility increase, if implemented, may provide
for higher applicable margins, with limitations, for interest
rates than those in effect for the original revolving commitments
under the Credit Agreement.
The obligations of the Company under the Credit Agreement are
secured by first priority liens on substantially all the United
States assets of the Company, as well as a pledge of 65% of the
voting equity of entities holding the Companys foreign
subsidiaries.
The Credit Agreement contains representations given to the
Lenders about the nature and status of the Companys business that
serve as conditions to future borrowings, and affirmative, as
well as negative, covenants typical of senior facilities of this
kind that prohibit or limit a variety of actions by the Company
(and the Companys subsidiaries) generally without the Lenders
approval. These include covenants that affect the ability of
those entities, among other things, to (a)incur or guarantee
indebtedness, (b)create liens, (c)enter into mergers,
recapitalizations or assets purchases or sales, (d)change names,
(e)make certain changes to their business, (f)make restricted
payments that include dividends, purchases and redemptions of
equity, (g)make advances, investments or loans, (h)effect sales
and leasebacks or (i)enter into transactions with affiliates,
(j)allow negative pledges or limitations on the repayment
abilities of subsidiaries or (k)amend subordinated debt. However,
subject to continued compliance with the overall leverage
restrictions described in more detail below, the Company retains
flexibility under the Credit Agreement to develop its business
and achieve strategic goals by, among other things, being
permitted to take on additional debt, pay dividends, re-acquire equity and make
domestic acquisitions. Foreign acquisitions and investments are
also permitted provided that after giving effect to any such
investment on a pro forma basis, the Total Leverage Ratio (as
defined and calculated according to the Credit Agreement) shall
be .25 less than the then applicable level set forth in the
Credit Agreement and after giving effect to any such investment
and the aggregate amount of all such investments during the term
of the Credit Agreement does not exceed the Applicable Amount (as
defined and calculated according to the Credit Agreement)
immediately prior to giving effect to such contemplated
investment. Investments in certain joint ventures are permitted
in an aggregate amount not to exceed $25,000,000 at any one time
outstanding.
Among its
affirmative covenants, the Credit Agreement requires the Company
to maintain the following consolidated ratios (as defined and
calculated according to the Credit Agreement) as of the end of
each fiscal quarter:
(a) Total Leverage
Ratio less than or equal to 3.50 to 1.00 (provided that, at the
election of the Company, such ratio level shall step up to 4.00
to 1.00 for four consecutive fiscal quarters following the date
on which a Permitted Acquisition (as defined in the Credit
Agreement) with a purchase price equal to or greater than
$75,000,000 is consummated); and
(b) Interest
Coverage Ratio greater than or equal to 3.00 to 1.00.
On December22,
2016, the date the Company entered into the Credit Agreement, the
Total Leverage Ratio and Interest Coverage Ratio calculated in
accordance with the Credit Agreement were 1.69 and 14.75,
respectively.
The Credit
Agreement provides for Events of Default that, unless waived, can
or will lead to acceleration of obligations upon the occurrence,
continuation and/or notice, as applicable, of specified events
typical of senior facilities of this kind. These include
(a)failures to pay interest or principal on loans,
(b)misrepresentations, (c) failures to observe covenants,
(d)cross defaults of other indebtedness in excess of
$20.0million, (e)uninsured and unsatisfied judgments in excess of
$20.0million or certain orders or injunctions, (f)bankruptcy and
insolvency events, (g)events leading to aggregate liability under
the Employee Retirement Income Security Act of 1974 (ERISA) in
excess of $20.0million, (h)changes of control, (i)invalidity of
credit support /security agreements, and (j)certain
disadvantageous changes in Credit Agreement debt compared to
subordinated debt.
As of the date of
this Current Report on Form 8-K, $185.0million had been borrowed
under the Credit Agreement, and total availability was
$264.0million, taking into account $1.0million in face amount of
letters of credit.
The above summary
description is qualified in its entirety by the full text of the
Credit Agreement, a copy of which is filed as Exhibit 10.1 to
this Current Report on Form 8-K.
| Item1.02 |
Termination of a Material Definitive Agreement |
The Credit
Agreement effectively replaces a smaller senior credit facility
previously entered into by the Company to that certain Amended
and Restated Credit Agreement, dated as of December 21, 2012, as
subsequently amended, among the Company and a group of lenders,
including Wells Fargo Bank, National Association, as
administrative agent (the 2012 Agreement). The proceeds of the
Credit Agreement are being used, among other things, to refinance
the indebtedness under the 2012 Agreement.
| Item8.01 | Other Events |
On December22,
2016, the Registrant issued a press release announcing the entry
into the Credit Agreement described in Item 1.01. A copy of that
press release is filed as Exhibit 99.1 to this Current Report on
Form 8-K.
| Item9.01 | Financial Statements and Exhibits. |
The following
exhibits are filed with this report:
| (d)Exhibit No. | Description | |
| 10.1 |
Credit Agreement, dated December22, 2016, between the Company and a group of Lenders, including Wells Fargo Bank, National Association, as administrative agent |
|
| 99.1 |
Press Release dated December22, 2016 regarding Credit Agreement |
About INNOPHOS HOLDINGS, INC. (NASDAQ:IPHS)
Innophos Holdings, Inc. is a producer of nutritional specialty ingredients with applications in food, beverage, dietary supplements, pharmaceutical, oral care and industrial end markets. The Company also provides bioactive mineral and nutritional ingredients. Its segments include Specialty Phosphates US & Canada, Specialty Phosphates Mexico, and GTSP & Other. The Specialty Phosphates US & Canada segment and Specialty Phosphates Mexico segment comprises product lines, such as Specialty Ingredients; Food and Technical Grade Purified Phosphoric Acid (PPA), and Technical Grade Sodium Tripolyphosphate (STPP) & Detergent Grade PPA. The GTSP & Other segment includes fertilizer co-product Granular Triple Super Phosphate (GTSP) and other non-specialty phosphate products. It produces a range of botanical, enzyme and mineral-based ingredients through various production processes, including spray drying, roller compactions, grinding, wet granulations, solvent extractions and custom blending. INNOPHOS HOLDINGS, INC. (NASDAQ:IPHS) Recent Trading Information
INNOPHOS HOLDINGS, INC. (NASDAQ:IPHS) closed its last trading session up +1.01 at 53.79 with 73,017 shares trading hands.
