MTS SYSTEMS CORPORATION (NASDAQ:MTSC) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.
On July6, 2017, MTS Systems Corporation (the “Company”) entered into an amendment (the “Amendment”) to its Credit Agreement dated as of July5, 2016 among the Company, the Company’s foreign subsidiaries from time to time party thereto, the lenders from time to time party thereto, U.S. Bank National Association and HSBC Bank USA, National Association as Co-Documentation Agents, Wells Fargo Bank, National Association as Syndication Agent, JPMorgan Chase Bank, N.A. as Administrative Agent and JP Morgan Chase Bank, N.A. and Wells Fargo Securities, LLC as Joint Bookrunners and Joint Lead Arrangers (the “Credit Agreement”). The Credit Agreement provides for a senior secured credit facility.
The Credit Agreement was amended to decrease the applicable interest rate margin for the TrancheB Term Loans under the Credit Agreement by 100 basis points for both Eurocurrency Term Loans and ABR Term Loans (as defined in the Credit Agreement). As a result, the applicable margin for TrancheB Term Loans designated as Eurocurrency Term Loans will be 3.25% and the applicable rate for TrancheB Term Loans designated as ABR Term Loans will be 2.25%. In addition, the applicable margin for loans under the revolving credit facility, as well as the commitment fee payable on the average daily amount of the available revolving commitment, was reduced to the percentages set forth below determined in accordance with the following pricing grid based on the Company’s total leverage ratio:
|
TotalLeverageRatio |
Commitment FeeRate |
Eurocurrency Spreadfor RevolvingLoans |
ABR SpreadforRevolving Loans |
||||
|
Category 1: |
< 2.00 to 1.00 |
0.25 |
% |
2.00 |
% |
1.00 |
% |
|
Category 2: |
> 2.00 to 1.00 but < 2.50 to 1.00 |
0.25 |
% |
2.25 |
% |
1.25 |
% |
|
Category 3: |
> 2.50 to 1.00 but < 3.00 to 1.00 |
0.30 |
% |
2.50 |
% |
1.50 |
% |
|
Category 4: |
> 3.00 to 1.00 but < 3.50 to 1.00 |
0.35 |
% |
2.75 |
% |
1.75 |
% |
|
Category 5: |
> 3.50 to 1.00 |
0.40 |
% |
3.00 |
% |
2.00 |
% |
The Amendment also reset the period during which a 1.0% premium payment may be required for a “Repricing Transaction” (as defined in the Credit Agreement) until one year after the effective date of the Amendment.
The financial institutions party to the Credit Agreement and the Amendment have performed and may continue to perform commercial banking and financial services for the Company for which they have received and will continue to receive customary fees.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit10.1 hereto and incorporated by reference in this Current Report on Form8-K.
Item 1.01. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The discussion set forth in Item 1.01 is incorporated into this Item 1.01 by reference.
