Milacron Holdings Corp. (NYSE:MCRN) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into Material Definitive Agreement |
(A) Term Loan Facility
Overview. On February15, 2017, Milacron LLC (the
Borrower), a wholly-owned subsidiary of Milacron Holdings Corp.
(the Company), entered into (i)Amendment No.1 (the Amendment)
which amends that certain previously disclosed Term Loan
Agreement dated as of May14, 2015 (the Original Term Loan
Agreement, and as amended by the Amendment, the Term Loan
Agreement), and (ii)related security and other agreements, for a
$947 million senior secured term loan facility (the Term Loan
Facility) with certain lenders party thereto and JPMorgan Chase
Bank, N.A. as administrative agent.
The Term Loan Agreement provides that the Borrower may request
increases to the Term Loan Facility and/or one or more
incremental term loan facilities in an aggregate principal amount
not to exceed (x)$220 million (which amount shall be increased by
the principal amount of any voluntary prepayments of term loans
under the Term Loan Facility (other than with the proceeds of
(i)long-term indebtedness or (ii), any incremental facilities
that serve to effectively extend the maturity of any class of
loans or commitments under the Term Loan Agreement)), plus (y)an
additional amount, subject to compliance on a pro forma basis
with a total net secured leverage ratio of no greater than
4.00:1.00. Availability of such additional tranches of term loans
and/or increased commitments is subject to, among other
conditions, the absence of any event of default under the Term
Loan Agreement and the receipt of commitments by existing or
additional financial institutions.
Interest Rate and Fees. Borrowings under the Term Loan
Facility bears interest at a rate per annum equal to an
applicable margin or applicable rate plus, at the Borrowers
option, either (a)a base rate determined by the reference to the
highest of (1)the prime commercial lending rate publicly
announced by the administrative agent of the Term Loan Facility
as the prime rate as in effect on such day, (2)the federal funds
effective rate plus 0.50%, and (3)the LIBOR rate determined by
reference to the cost of funds for Eurodollar deposits for an
interest period of one month, plus 1.00% or (b)a LIBOR rate
(which shall be no less than 0.00%) determined by reference to
the costs of funds for Eurodollar deposits for the specified
interest period, as adjusted for certain statutory reserve
requirements. The applicable margins for borrowings under the
Term Loan Agreement are (i)2.00% with respect to base rate
borrowings and 3.00% with respect to LIBOR borrowings, subject to
compliance with a total net leverage ratio of greater than
3.50:1:00 and (ii)1.75% with respect to base rate borrowings and
2.75% with respect to LIBOR borrowings, subject to compliance
with a total net leverage ratio not to exceed 3.50:1:00.
Mandatory Prepayments. The Term Loan Agreement requires
the Borrower to prepay, subject to certain exceptions,
outstanding term loans with:
|
50% of net cash proceeds of any incurrence of debt, other than the net cash proceeds of certain debt permitted under the Term Loan Agreement; and |
|
50% of net cash proceeds of certain asset sales, subject to reinvestment rights and certain other exceptions. |
Voluntary Prepayments. The Borrower may voluntarily
reduce the unutilized portion of the commitment amount and repay
outstanding loans under the Term Loan Facility at any time
without premium or penalty other than (a)customary breakage costs
with respect to LIBOR borrowings and (b)in the case of the Term
Loan Facility, a 1.00% call protection premium applicable to
certain repricing transactions occurring on or prior to the date
that is six months after February15, 2017.
Amortization and Final Maturity. Commencing March31,
2017, the Borrower shall repay borrowings on the last day of
March, June, September and December in each year prior to
September28, 2023, in each case in an amount equal to 0.25% of
the original principal amount of the loans outstanding on
February15, 2017, with the balance due on September28, 2023.
Guarantees and Security. All obligations under the Term
Loan Facility are unconditionally guaranteed by the Company and
certain of the Borrowers existing and future direct and indirect
wholly-owned domestic subsidiaries. All obligations under the
Term Loan Facility, and the guarantees of those obligations, are
secured, subject to certain exceptions, by substantially all of
the Borrowers assets and the assets of the guarantors, including:
|
a first-priority or second-priority pledge, as applicable, of all of the Borrowers capital stock directly held by the Company and a first-priority or second-priority pledge, as applicable, of all of the capital stock directly held by the Borrower, the co-borrower and its subsidiary guarantors; and |
|
a first-priority or second-priority security interest, as applicable, in substantially all of the Borrowers, the co-borrowers and the guarantors tangible and intangible assets, including certain deposit accounts. |
Certain Covenants and Events of Default. The Senior
Credit Facilities contain a number of restrictive covenants that,
among other things and subject to certain exceptions, restrict
the Borrowers ability and the ability of each of the Borrowers
restricted subsidiaries to:
| incur additional indebtedness; |
|
pay dividends on its capital stock or redeem, repurchase or retire its capital stock; |
| make investments, loans and acquisitions; |
|
create negative pledge or restrictions on the payment of dividends or payment of other amounts owed to the Borrower from its subsidiaries; |
| engage in transactions with its affiliates; |
|
sell, transfer or otherwise dispose of its assets, including capital stock of its subsidiaries; |
| materially alter the business it conducts; |
| modify certain material documents; |
| change its fiscal year; |
| consolidate, merge, liquidate or dissolve; |
| incur liens; and |
| make prepayments of certain debt. |
The Company is not generally subject to the negative covenants
under the Term Loan Facility, but is subject to a passive holding
company covenant that will limit its ability to engage in certain
activities.
The Term Loan Facility also contains certain customary
representations and warranties, affirmative covenants and
reporting obligations. In addition, the lenders under the Term
Loan Facility are permitted to accelerate the loans and terminate
commitments thereunder or exercise other specified remedies
available to secured creditors upon the occurrence of certain
events of default, subject to certain grace periods and
exceptions, which include, among others, payment defaults,
breaches of representations and warranties, covenant defaults,
cross-defaults to certain material indebtedness, certain events
of bankruptcy, certain events under the Employee Retirement
Income Security Act of 1974, as amended, material judgments and
changes of control.
This description of the Term Loan Facility does not purport to be
complete and is qualified in its entirety by reference to the
Amendment, the Term Loan Agreement, and the related security and
other agreements, which are attached to this Current Report on
Form8-K as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and
are incorporated herein by reference.
(B) Interest Rate Swap Transactions
On February16, 2017, the Borrower entered into interest rate swap
transactions effective February 2018 February 2022 with a
notional amount of $400 million. The interest rate swaps are
intended to manage the Borrowers interest rate risk by fixing the
interest rate on a portion of the Borrowers debt currently
outstanding under its credit facility that was previously subject
to a floating interest rate equal to 1-month LIBOR plus a credit
spread. The swap provides for the Borrower to pay a fixed rate of
2.062%per annum on such portion of its outstanding debt in
exchange for receiving a variable interest rate based on 1-month
LIBOR. The effect is a synthetically fixed rate of 2.062% the
loan spread for the term and debt hedged.
| Item1.02 | Termination of Material Definitive Agreement |
Existing Term Loan Facility
On February15, 2017, in connection with the closing of the Term
Loan Facility, all amounts outstanding and other obligations
under the previously existing term loans under the Original Term
Loan Agreement were repaid in full.
Indenture and Notes
As previously disclosed, on January13, 2017 the Company delivered
to the holders of its 7.75% senior notes due 2021 (the Notes)
conditional notices of redemption, notifying those holders of the
redemption of the entire outstanding $464 million aggregate
principal amount of the Notes to be redeemed on February15, 2017
(the Redemption Date) to the terms of the indenture dated as of
March28, 2013, as supplemented and amended from time to time,
among the Borrower, the guarantors party thereto and U.S. Bank
National Association, as trustee (the Notes Indenture). The
redemption price for the Notes (the Redemption Price) is equal to
103.875% of the principal amount of the Notes, plus accrued and
unpaid interest thereon, to but excluding the Redemption Date.
On February15, 2017, the Borrower deposited an amount of funds
with the trustee sufficient for the redemption of the Notes. The
Notes Indenture has been satisfied and discharged in accordance
with its terms and the Borrower and the guarantors party thereto
have been released from their obligations with respect to the
Notes Indenture and the Notes, except with respect to those
provisions of the Notes Indenture that by their terms survive the
satisfaction and discharge.
| Item2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The disclosure set forth under Item1.01 above is incorporated
herein by reference.
| Item9.01. | Financial Statements and Exhibits |
(d) Exhibits
|
Exhibit No. |
Description |
|
| 10.1 |
Amendment No. 1 to Term Loan Agreement, dated as of February 15, 2017 by and among Milacron Holdings Corp., Milacron LLC, the subsidiaries of the borrower from time to time party thereto, the financial institutions party thereto, as the Lenders, and JPMorgan Chase Bank, N.A., as Administrative Agent. |
|
| 10.2 |
Intellectual Property Security Agreement Supplement (Trademark), dated as of February 15, 2017 by and among Milacron LLC and JPMorgan Chase Bank, N.A., as Collateral Agent. |
|
| 10.3 |
Intellectual Property Security Agreement Supplement (Patent), dated as of February 15, 2017 by and among Milacron Marketing Company LLC and JPMorgan Chase Bank, N.A., as Collateral Agent. |
|
| 10.4 |
Intellectual Property Security Agreement Supplement (Patent), dated as of February 15, 2017 by and among Milacron LLC and JPMorgan Chase Bank, N.A., as Collateral Agent. |
About Milacron Holdings Corp. (NYSE:MCRN)
Milacron Holdings Corp. is engaged in the manufacture, distribution, and service of engineered and customized systems used in the plastic technology and processing industry. The Company operates through three segments: Advanced Plastic Processing Technologies (APPT), Melt Delivery and Control Systems (MDCS), and Fluid Technologies (Fluids). The APPT segment is engaged in the manufacture, distribution and service of equipment and products used in the plastic technology and processing industry, including injection molding, blow molding and extrusion applications. The MDCS segment is engaged in the manufacture of plastic delivery and precision control systems, which are recurring, consumable sales for injection molding applications. The Fluids segment is engaged in the manufacture of coolants, lubricants, process cleaners and corrosion inhibitors that are used in a range of metalworking industries, such as cutting, grinding, stamping and forming and high speed machining. Milacron Holdings Corp. (NYSE:MCRN) Recent Trading Information
Milacron Holdings Corp. (NYSE:MCRN) closed its last trading session down -0.03 at 17.91 with 189,112 shares trading hands.