METHODE ELECTRONICS, INC. (NYSE:MEI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry Into a Material Definitive Agreement

On September 12, 2018, Methode Electronics, Inc. (the “Company”) entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender, and L/C Issuer, Wells Fargo Bank, National Association, as L/C Issuer, and the Lenders named therein. The Credit Agreement amends and restates the Credit Agreement, dated November 18, 2016 (the “Existing Credit Agreement”), among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender, and L/C Issuer, Wells Fargo Bank, National Association, as L/C Issuer, and the Lenders named therein. Among other things, the Credit Agreement (i) provides for a term loan facility in an aggregate principal amount up to $250,000,000, (ii) increases the multicurrency revolving credit commitments under the Existing Credit Agreement to $200,000,000, and (iii) makes certain other changes to the covenants, terms, and conditions under the Existing Credit Agreement.

Loans under the Credit Agreement bear interest at either (a) an adjusted base rate or (b) an adjusted LIBOR rate, in each case plus an applicable margin (the “Applicable Margin”) ranging between 0.25% and 1.00%, in the case of adjusted base rate loans, and between 1.25% and 2.00%, in the case of adjusted LIBOR rate loans. The Applicable Margin is based on the Company’s consolidated leverage ratio. Fees to revolving lenders under the Credit Agreement include (i) commitment fees ranging between 0.15% and 0.35% of the daily unused portions of the revolving credit facility, based on the Company’s consolidated leverage ratio, and (ii) customary letter of credit fees.

The credit facilities under the Credit Agreement mature on September 12, 2023. The term loans under the Credit Agreement amortize at a per annum rate equal to 5.0% of their original aggregate principal amount, payable quarterly, with the balance due at maturity.

The obligations under the Credit Agreement are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s subsidiaries. The Credit Agreement permits the Company to designate certain of its foreign subsidiaries as borrowers under the revolving credit facility.

The Credit Agreement contains a number of customary affirmative and negative covenants that, among other things, will limit or restrict the ability of the Company and its subsidiaries to incur additional indebtedness, make investments; incur liens; engage in mergers or consolidations or dispose of substantially all the assets of the Company and its subsidiaries; sell assets; pay dividends and make other payments in respect of capital stock, make investments, loans, and advances; and engage in certain transactions with affiliates. The Credit Agreement contains customary events of default.

The Company used the proceeds of borrowings under the Credit Agreement on September 12, 2023 to fund a portion of the purchase price for the Grakon Acquisition (as defined below) and expects to use the proceeds of other borrowings under the Credit Agreement for general corporate purposes.

The foregoing description of the Credit Agreement is not intended to be complete and is qualified in its entirety by reference to the Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On September 12, 2018, to the Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Flash Merger Sub Corp., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Grakon Parent, Inc., a Delaware corporation (“Grakon”), and Industrial Growth Partners IV, L.P., a Delaware limited partnership, the Company completed the acquisition of Grakon (the “Grakon Acquisition”). to the Merger Agreement, Merger Sub merged with and into Grakon with Grakon as the surviving entity in such merger and as a result of which Grakon became a direct wholly owned subsidiary of the Company. The Company paid a purchase price of $420 million in cash, on a cash-free, debt-free basis, subject to customary purchase price adjustments.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

Item 8.01 Other Events.

On September 12, 2018, the Company issued a press release announcing the completion of the transaction, which is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

The financial statements required by this Item 9.01(a) will be filed by amendment to this Current Report on Form 8-K to be filed with the SEC within the period required to applicable SEC rules.

(b) Pro forma Financial Information.

The pro forma financial information required by this Item 9.01(b) will be filed by amendment to this Current Report on Form 8-K to be filed with the SEC within the period required to applicable SEC rules.

(d)Exhibits

METHODE ELECTRONICS INC Exhibit
EX-10.1 2 amendedandrestatedcreditag.htm AMENDED AND RESTATED CREDIT AGREEMENT,…
To view the full exhibit click here

About METHODE ELECTRONICS, INC. (NYSE:MEI)

Methode Electronics, Inc. (Methode) is a manufacturer of component and subsystem devices. The Company designs, manufactures and markets devices employing electrical, radio remote control, electronic, wireless and sensing technologies. The Company operates through segments, including Automotive, Interface, Power Products and Other. The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile original equipment manufacturers (OEMs). The Interface segment provides a range of copper and fiber-optic interface and interface solutions. The Power Products segment manufactures braided flexible cables, current-carrying laminated bus devices, custom power-product assemblies, such as PowerRail solution, high-current low voltage flexible power cabling systems and powder coated bus bars. The Other segment includes medical devices, inverters and battery systems, and insulated gate bipolar transistor solutions.