Installed Building Products, Inc. (NYSE:IBP) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On April13, 2017 (the Closing Date), Installed Building Products,
Inc., a Delaware corporation (the Company), as borrower, entered
into a term loan credit agreement (the Term Loan Agreement) with
the lenders from time to time party thereto, Royal Bank of Canada
as term administrative agent and RBC Capital Markets, UBS
Securities LLC and Jefferies Finance LLC as joint lead arrangers
and joint bookrunners. The Term Loan Agreement, subject to the
terms and conditions set forth therein, provides for a new
seven-year $300,000,000 term loan facility (the Term Loan).
On the Closing Date, the Company, as borrower, also entered into
an asset-based lending credit agreement (the ABL Credit Agreement
and together with the Term Loan Agreement, the Senior Secured
Credit Agreements) with the subsidiary guarantors from time to
time party thereto, the financial institutions from time to time
party thereto, and SunTrust Bank, as issuing bank, swing bank and
administrative agent, with SunTrust Robinson Humphrey, Inc. as
left lead arranger and bookrunner. The ABL Credit Agreement
provides for a revolving credit facility of up to approximately
$100,000,000 and up to $50,000,000 for the issuance of letters of
credit (the ABL Revolver), which may be reduced or increased to
the ABL Credit Agreement. The borrowing base for the ABL
Revolver, which determines availability under the facility, is
based on a percentage of the value of certain of assets
comprising the ABL Priority Collateral (as defined below).
Proceeds from the Senior Secured Credit Facilities were used to
repay in full all amounts outstanding under the Credit and
Security Agreement, dated February29, 2016 (the Credit and
Security Agreement), by and among the Company, the lenders party
thereto and KeyBank National Association, as joint lead arranger,
sole book runner, administrative agent, swing line lender and
issuing lender. The Company also intends to use the Senior
Secured Credit Facilities to fund ongoing operating and working
capital needs and other general corporate purposes, and for
certain fees and expenses associated with the closing of the
Senior Secured Credit Facilities.
Maturity, Amortization and Prepayment
The Term Loan amortizes in quarterly principal payments of
$750,000 starting on September30, 2017, with any remaining unpaid
balances due on April15, 2024, which is the maturity date. Loans
incurred under the ABL Revolver will have a final maturity of
April13, 2022.
Subject to certain exceptions, the Term Loan will be subject to
mandatory pre-payments equal to (i) 50% of the net cash proceeds
from issuances or incurrence of debt by the Company or any of its
restricted subsidiaries (other than with respect to certain
permitted indebtedness); (ii) 50% of the net cash proceeds from
certain sales or dispositions of assets by the Company or any of
its restricted subsidiaries in excess of a certain amount and
subject to customary reinvestment provisions and certain other
expenses; and (iii) 50% (with step-downs to 25% and 0% based upon
achievement of specified net leverage ratios) of excess cash flow
of the Company and its restricted subsidiaries in excess of
$5,000,000, subject to customary exceptions and limitations.
Security and Guarantees
All of the obligations under the Senior Secured Credit Facilities
will be guaranteed by all of the existing and future restricted
subsidiaries of the Company (the Guarantors).
All obligations under the Senior Secured Credit Facilities, and
the guarantees of those obligations, will be secured by
substantially all of the assets of the Company and the guarantors
subject to certain exceptions and permitted liens, including
(i)with respect to the Term Loan, a first-priority security
interest in such assets that constitute Term Loan Priority
Collateral and a second-priority security interest in such assets
that constitute ABL Priority Collateral and (ii)with respect to
the ABL Revolver, a first-priority security interest in such
assets that constitute ABL Priority Collateral and a
second-priority security interest in such assets that constitute
Term Loan Priority Collateral.
ABL Priority Collateral includes substantially all presently
owned and after-acquired accounts, inventory, rights of an unpaid
vendor with respect to inventory, deposit accounts, commodity
accounts, securities accounts and lock boxes, investment
property, cash and cash equivalents, and instruments and chattel
paper and general intangibles, books and records, supporting
obligations and documents and related letters of credit,
commercial tort claims or other claims related to and proceeds of
each of the foregoing.
Term Loan Priority Collateral includes all assets that are not
ABL Priority Collateral.
Interest Rates
Loans under the Senior Secured Credit Facilities will bear
interest based on, at the Companys election, either the base rate
or the Eurodollar rate plus, in each case, an applicable margin
(the Applicable Margin). The Applicable Margin in respect of
loans under (i)the Term Loan Agreement will be (A) 3.00% in the
case of Eurodollar rate loans and (B) 2.00% in the case of base
rate loans, and (ii)the ABL Facility will be (A) 1.25%, 1.50% or
1.75% in the case of Eurodollar rate loans (based on a measure of
availability under the ABL Facility) and (B) 0.25%, 0.50% or
0.75% in the case of base rate loans (based on a measure of
availability under the ABL Facility).
In addition, the Company will pay a closing fee of 1.25% of the
Term Loan amount and customary commitment fees and letter of
credit fees under the ABL Credit Agreement. The commitment fees
will vary based upon a measure of the Companys utilization under
the ABL Revolver.
Covenants
The Senior Secured Credit Facilities each contain a number of
customary affirmative and negative covenants that, among other
things, limit or restrict the ability of the Company and the
Guarantors to: incur indebtedness; incur liens; engage in mergers
or other fundamental changes; sell certain property or assets;
pay dividends or other distributions; make acquisitions,
investments, guarantees, loans and advances; prepay certain
indebtedness; change the nature of their business; engage in
certain transactions with affiliates; and incur restrictions on
contractual obligations limiting interactions between the Company
and its subsidiaries or limit actions in relation to the Senior
Secured Credit Facilities.
The ABL Credit Agreement also contains a financial covenant
requiring the satisfaction of a minimum fixed charge coverage
ratio of 1.00 to 1.00 in the event that the Company does not meet
a minimum measure of availability under the ABL Revolver.
Events of Default
The Senior Secured Credit Agreements contains customary events of
default, subject to certain grace periods, thresholds and
materiality qualifiers. Such events of default include, without
limitation: non-payment of obligations; the material inaccuracy
of any representations or warranties; failure to perform or
observe covenants; a default related to other material debt that
could result in the acceleration of that debt; certain events of
bankruptcy or insolvency; judgments for the payment of money in
excess of $50,000,000 in the aggregate that remains unpaid or
unstayed and undischarged for a period of 60 consecutive days;
and a change of control of the Company. The occurrence and
continuance of an event of default could result in, among other
things, acceleration of amounts owing under the Senior Secured
Credit Agreements and termination of the Senior Secured Credit
Agreements.
Under the Term Loan Agreement, if upon the occurrence and during
the continuance of certain events of default, any principal of or
interest on any loan under the Term Loan Agreement or any fee or
other amount payable by the Company is not paid when due, whether
at stated maturity, upon acceleration or otherwise, such overdue
amount will bear interest at a rate per annum equal to (i)in the
case of overdue principal of any loan under the Term Loan
Agreement, 2.00% per annum plus the rate otherwise applicable to
such loan, or (ii)in the case of any other amount, 2.00% per
annum plus interest rate for base rate loans as described above.
Under the ABL Credit Agreement, during an event of default,
interest on the outstanding and overdue obligations arising under
the ABL Credit Agreement and the related loan documents may, at
the administrative agents election, and shall, at the request of
the Majority Lenders (as defined in the ABL Credit Agreement),
accrue at a simple per annum interest rate equal to, with respect
to all outstanding obligations under the ABL Credit Agreement,
the sum of (i)the applicable interest rate basis, if any, with
respect to the applicable obligation, plus (ii)the Applicable
Margin for such interest rate basis, plus (iii) 2.00% (the ABL
Default Rate); provided, however, that the ABL Default Rate will
automatically deemed to be invoked at all times with respect to
overdue obligations under the ABL Credit Agreement and the
related loan documents that have been accelerated or deemed
accelerated under the ABL Credit Agreement.
The foregoing descriptions of the material terms and conditions
of the Senior Secured Credit Facilities do not purport to be
complete and are subject to and qualified in their entirety by
the full text of the Term Loan Agreement, the ABL Credit
Agreement, copies of which are attached hereto as Exhibits 10.1
and 10.2, respectively, and incorporated herein by reference, and
the ABL/Term Loan Intercreditor Agreement, the Term Collateral
Agreement, the ABL Security Agreement and the Term Guarantee
Agreement, each dated as of the Closing Date, which are attached
hereto as Exhibits 10.3, 10.4, 10.5 and 10.6, respectively, and
incorporated herein by reference.
| Item1.02. |
Termination of a Material Definitive Agreement. |
On the Closing Date, the Company terminated the Credit and
Security Agreement and repaid all outstanding obligations
thereunder using proceeds from the Senior Secured Credit
Facilities. In connection with the termination of the Credit and
Security Agreement, all security interests and pledges granted to
the secured parties thereunder were terminated and released. The
Company did not incur any early termination penalties in
connection with the termination of the Credit and Security
Agreement. A description of the Credit and Security Agreement is
included in the Companys Current Report on Form 8-K filed on
March1, 2016, and such description is incorporated by reference
into this Item 1.02.
| Item2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosures under Item 1.01 of this Current Report on Form
8-K relating to the Senior Secured Credit Facilities are also
responsive to Item 2.03 of this report and are incorporated by
reference into this Item 2.03.
| Item7.01. | Regulation FD Disclosure. |
On April17, 2017, the Company issued a press release announcing
the execution of the Senior Secured Credit Facilities. A copy of
the press release is furnished as Exhibit 99.1 to this report.
The information contained in this Item7.01, including Exhibit
99.1 attached hereto, is being furnished and shall not be deemed
to be filed for the purposes of Section18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section. Furthermore, the information
contained in this Item7.01, including Exhibit 99.1 attached
hereto, shall not be deemed to be incorporated by reference into
any registration statement or other document filed with the
Securities and Exchange Commission, except as shall be expressly
set forth by specific reference in such filing.
| Item9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
|
Exhibit Number |
Description |
|
| 10.1 |
Term Loan Credit Agreement, dated April13, 2017, by and among Installed Building Products, Inc., the lenders party thereto from time to time, Royal Bank of Canada, as term administrative agent, and RBC Capital Markets, UBS Securities LLC and Jefferies Finance LLC as joint lead arrangers and joint bookrunners. |
|
| 10.2 |
Credit Agreement, dated April13, 2017, by and among Installed Building Products, Inc., the subsidiary guarantors from time to time party thereto, the financial institutions from time to time party thereto, and SunTrust Bank, as issuing bank, swing bank and administrative agent, with SunTrust Robinson Humphrey, Inc. as left lead arranger and bookrunner. |
|
| 10.3 |
ABL/Term Loan Intercreditor Agreement, dated April13, 2017, by and among Installed Building Products, Inc., SunTrust Bank, as ABL agent, Royal Bank of Canada, as term loan agent, and each of the agents and certain of the Companys subsidiaries from time to time party thereto. |
|
| 10.4 |
Term Collateral Agreement, dated April13, 2017, among Installed Building Products, Inc., certain of its subsidiaries and Royal Bank of Canada, as term collateral agent. |
|
| 10.5 |
ABL Security Agreement, dated April13, 2017, among Installed Building Products, Inc., certain of its subsidiaries and SunTrust Bank, as administrative agent. |
|
| 10.6 |
Term Guarantee Agreement, dated April13, 2017, among certain of Installed Building Products, Inc.s subsidiaries and Royal Bank of Canada, as term collateral agent. |
|
| 99.1 |
Press Release of Installed Building Products, Inc. dated April17, 2017. |
About Installed Building Products, Inc. (NYSE:IBP)
Installed Building Products, Inc. is a holding company. The Company is a residential insulation installer in the United States. The Company’s national platform consists of over 100 locations accessing customers in approximately 50 continental states and the District of Columbia. The Company also installs complementary building products, including garage doors, rain gutters, shower doors, closet shelving and mirrors, which provide cross-selling opportunities to supplement the insulation installation business. The Company manages various aspects of the installation process for the customers, from the direct purchase and receipt of materials from national manufacturers, to supply of materials to job sites and quality installation. The Company handles various stages of the installation process, including material procurement, project scheduling and logistics, multi-phase professional installation and field quality inspection. Installed Building Products, Inc. (NYSE:IBP) Recent Trading Information
Installed Building Products, Inc. (NYSE:IBP) closed its last trading session down -0.85 at 50.60 with 76,967 shares trading hands.