NL Industries, Inc. (NL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement
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Item 1.02 Termination of a Material Definitive Agreement
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Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant |
On November 14, 2016, NLKW Holding, LLC, a newly-formed,
wholly-owned subsidiary of the registrant (“NLKW”), entered
into a $50 million revolving credit facility (the “Valhi
Credit Facility”) with Valhi, Inc., the registrant’s
publicly-held parent corporation (“Valhi”). Previously, and
in contemplation of the financing transaction described herein,
the registrant formed NLKW and capitalized it with
approximately 35.2 million shares of the common stock of Kronos
Worldwide, Inc. held by the registrant (the “Kronos Stock”).
to the terms of the Valhi Credit Facility, NLKW can borrow up
to $50 million from Valhi (with such commitment amount subject
to increase from time to time in Valhi’s sole discretion).
Proceeds from any borrowings by NLKW under the Valhi Credit
Facility would be available for the registrant’s general
corporate purposes, but only to the extent one or more loans
are extended by NLKW to the registrant in accordance with the
terms of the Back-to-Back Credit Facility, as described below.
Outstanding borrowings under the Valhi Credit Facility will
bear interest at the prime rate plus 1.875% per annum, payable
quarterly, with all amounts due on December 31, 2023. The
maximum principal amount which may be outstanding from
time-to-time under the Valhi Credit Facility is limited to 50%
of the amount determined by multiplying the number of shares of
Kronos Stock by the most recent closing price of such security
on the New York Stock Exchange (or another recognized national
securities exchange if such security is not listed on the New
York Stock Exchange). Borrowings under the Valhi Credit
Facility are collateralized by (i) the Kronos Stock, to the
terms of a Pledge and Security Agreement, dated November 14,
2016, made by NLKW in favor of Valhi (the “Pledge and Security
Agreement,” and together with the Valhi Credit Facility, the
“Loan Documents”), and (ii) 100% of the membership interest
in NLKW held by the registrant, to the terms of a Back-to-Back
Pledge and Security Agreement, dated November 14, 2016, made by
the registrant in favor of Valhi (the “Back-to-Back Pledge and
Security Agreement”), as described below. The Valhi Credit
Facility contains a number of covenants and restrictions which,
among other things, restrict NLKW’s ability to incur
additional debt, incur liens, and merge or consolidated with,
or sell or transfer substantially all of NLKW’s assets to,
another entity, and require NLKW to maintain a minimum
specified level of consolidated net worth. Upon an event of
default (as defined in the Valhi Credit Facility, which
includes the failure of NLKW to make payments of principal or
interest when due or to otherwise comply with its covenants
under the Loan Documents, certain changes of control of NLKW or
the registrant, certain insolvency events of NLKW or the
registrant and other customary events of default), Valhi will
be entitled to terminate its commitment to make further loans
to NLKW, declare the outstanding loans (with interest)
immediately due and payable, and exercise its rights with
respect to the collateral under the Loan Documents. Such
collateral rights include, upon certain insolvency events with
respect to NLKW or the registrant, the right to purchase all of
the Kronos Stock at a purchase price equal to the aggregate
market value of the Kronos Stock (with such market value
determined by an independent third-party valuation provider),
less amounts owing to Valhi under the Loan Documents , and up
to 50% of such purchase price may be paid by Valhi in the form
of an unsecured promissory note bearing interest at the prime
rate plus 2.75% per annum, payable quarterly, with all amounts
due no later than five years from the date of purchase, with
the remainder of such purchase price payable in cash at the
date of purchase.
wholly-owned subsidiary of the registrant (“NLKW”), entered
into a $50 million revolving credit facility (the “Valhi
Credit Facility”) with Valhi, Inc., the registrant’s
publicly-held parent corporation (“Valhi”). Previously, and
in contemplation of the financing transaction described herein,
the registrant formed NLKW and capitalized it with
approximately 35.2 million shares of the common stock of Kronos
Worldwide, Inc. held by the registrant (the “Kronos Stock”).
to the terms of the Valhi Credit Facility, NLKW can borrow up
to $50 million from Valhi (with such commitment amount subject
to increase from time to time in Valhi’s sole discretion).
Proceeds from any borrowings by NLKW under the Valhi Credit
Facility would be available for the registrant’s general
corporate purposes, but only to the extent one or more loans
are extended by NLKW to the registrant in accordance with the
terms of the Back-to-Back Credit Facility, as described below.
Outstanding borrowings under the Valhi Credit Facility will
bear interest at the prime rate plus 1.875% per annum, payable
quarterly, with all amounts due on December 31, 2023. The
maximum principal amount which may be outstanding from
time-to-time under the Valhi Credit Facility is limited to 50%
of the amount determined by multiplying the number of shares of
Kronos Stock by the most recent closing price of such security
on the New York Stock Exchange (or another recognized national
securities exchange if such security is not listed on the New
York Stock Exchange). Borrowings under the Valhi Credit
Facility are collateralized by (i) the Kronos Stock, to the
terms of a Pledge and Security Agreement, dated November 14,
2016, made by NLKW in favor of Valhi (the “Pledge and Security
Agreement,” and together with the Valhi Credit Facility, the
“Loan Documents”), and (ii) 100% of the membership interest
in NLKW held by the registrant, to the terms of a Back-to-Back
Pledge and Security Agreement, dated November 14, 2016, made by
the registrant in favor of Valhi (the “Back-to-Back Pledge and
Security Agreement”), as described below. The Valhi Credit
Facility contains a number of covenants and restrictions which,
among other things, restrict NLKW’s ability to incur
additional debt, incur liens, and merge or consolidated with,
or sell or transfer substantially all of NLKW’s assets to,
another entity, and require NLKW to maintain a minimum
specified level of consolidated net worth. Upon an event of
default (as defined in the Valhi Credit Facility, which
includes the failure of NLKW to make payments of principal or
interest when due or to otherwise comply with its covenants
under the Loan Documents, certain changes of control of NLKW or
the registrant, certain insolvency events of NLKW or the
registrant and other customary events of default), Valhi will
be entitled to terminate its commitment to make further loans
to NLKW, declare the outstanding loans (with interest)
immediately due and payable, and exercise its rights with
respect to the collateral under the Loan Documents. Such
collateral rights include, upon certain insolvency events with
respect to NLKW or the registrant, the right to purchase all of
the Kronos Stock at a purchase price equal to the aggregate
market value of the Kronos Stock (with such market value
determined by an independent third-party valuation provider),
less amounts owing to Valhi under the Loan Documents , and up
to 50% of such purchase price may be paid by Valhi in the form
of an unsecured promissory note bearing interest at the prime
rate plus 2.75% per annum, payable quarterly, with all amounts
due no later than five years from the date of purchase, with
the remainder of such purchase price payable in cash at the
date of purchase.
On November 14, 2016, and contemporaneously with the entering
into of the Valhi Credit Facility, NLKW entered into a $50
million revolving credit facility (the “Back-to-Back Credit
Facility” and together with the Back-to-Back Pledge and Security
Agreement, the “Back-to-Back Loan Documents”) with the
registrant, to which the registrant can borrow up to $50 million
from NLKW (with such commitment amount subject to increase from
time to time in NLKW’s sole discretion). Proceeds from any
borrowings by the registrant under the Back-to-Back Credit
Facility would be available for the registrant’s general
corporate purposes. Outstanding borrowings under the Back-to-Back
Credit Facility bear interest at the same rate and are payable on
the same maturity date as are borrowings by NLKW under the Valhi
Credit Facility. Borrowings under the Back-to-Back Credit
Facility are on an unsecured basis; however, as a condition
thereto, the registrant pledged to Valhi as collateral for the
Valhi Credit Facility its 100% membership interest in NLKW to the
terms of the Back-to-Back Pledge and Security Agreement.
into of the Valhi Credit Facility, NLKW entered into a $50
million revolving credit facility (the “Back-to-Back Credit
Facility” and together with the Back-to-Back Pledge and Security
Agreement, the “Back-to-Back Loan Documents”) with the
registrant, to which the registrant can borrow up to $50 million
from NLKW (with such commitment amount subject to increase from
time to time in NLKW’s sole discretion). Proceeds from any
borrowings by the registrant under the Back-to-Back Credit
Facility would be available for the registrant’s general
corporate purposes. Outstanding borrowings under the Back-to-Back
Credit Facility bear interest at the same rate and are payable on
the same maturity date as are borrowings by NLKW under the Valhi
Credit Facility. Borrowings under the Back-to-Back Credit
Facility are on an unsecured basis; however, as a condition
thereto, the registrant pledged to Valhi as collateral for the
Valhi Credit Facility its 100% membership interest in NLKW to the
terms of the Back-to-Back Pledge and Security Agreement.
The independent members of the registrant’s Board of Directors
have approved the Loan Documents, the Back-to-Back Loan Documents
(together, with the Loan Documents, the “Basic Documents”) and
the transactions contemplated thereby.
have approved the Loan Documents, the Back-to-Back Loan Documents
(together, with the Loan Documents, the “Basic Documents”) and
the transactions contemplated thereby.
A copy of the Valhi Credit Facility, the Pledge and Security
Agreement, the Back-to-Back Credit Facility and the Back-to-Back
Pledge and Security Agreement are attached as Exhibit 10.1,
Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, to
this report and are incorporated herein by reference. The
foregoing description of the Basic Documents does not purport to
be complete and is qualified in its entirety by reference to the
Basic Documents. This summary of the principal terms of the Basic
Documents and the copy of the Basic Documents have been included
to provide security holders with information regarding their
terms. They are not intended to provide any other factual
information about the registrant, NLKW or Valhi. The
representations, warranties and covenants contained in the Basic
Documents were made solely for purposes of the Basic Documents
and as of specific dates, were solely for the benefit of the
parties to the Basic Documents, may be subject to limitations
agreed upon by the contracting parties, including being qualified
by confidential disclosures made for the purposes of allocating
contractual risk between the parties to the Basic Documents
instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to the contracting
parties that differ from those applicable to security holders.
Security holders are not third-party beneficiaries under the
Basic Documents and should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of
the registrant, NLKW or Valhi. Moreover, information concerning
the subject matter of the representations and warranties may
change after the date of the Basic Documents, which subsequent
information may or may not be fully reflected in the
registrant’s public disclosures.
Agreement, the Back-to-Back Credit Facility and the Back-to-Back
Pledge and Security Agreement are attached as Exhibit 10.1,
Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, to
this report and are incorporated herein by reference. The
foregoing description of the Basic Documents does not purport to
be complete and is qualified in its entirety by reference to the
Basic Documents. This summary of the principal terms of the Basic
Documents and the copy of the Basic Documents have been included
to provide security holders with information regarding their
terms. They are not intended to provide any other factual
information about the registrant, NLKW or Valhi. The
representations, warranties and covenants contained in the Basic
Documents were made solely for purposes of the Basic Documents
and as of specific dates, were solely for the benefit of the
parties to the Basic Documents, may be subject to limitations
agreed upon by the contracting parties, including being qualified
by confidential disclosures made for the purposes of allocating
contractual risk between the parties to the Basic Documents
instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to the contracting
parties that differ from those applicable to security holders.
Security holders are not third-party beneficiaries under the
Basic Documents and should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of
the registrant, NLKW or Valhi. Moreover, information concerning
the subject matter of the representations and warranties may
change after the date of the Basic Documents, which subsequent
information may or may not be fully reflected in the
registrant’s public disclosures.
Also on November 14, 2016, the registrant and Valhi agreed to the
termination of the previously-reported $40 million revolving
promissory note between the registrant and Valhi, to which the
registrant could borrow up to $40 million from Valhi on an
unsecured basis, with outstanding borrowings at any time solely
at the discretion of Valhi. There were no outstanding borrowings
by the registrant under such revolving promissory note at the
time of its termination.
termination of the previously-reported $40 million revolving
promissory note between the registrant and Valhi, to which the
registrant could borrow up to $40 million from Valhi on an
unsecured basis, with outstanding borrowings at any time solely
at the discretion of Valhi. There were no outstanding borrowings
by the registrant under such revolving promissory note at the
time of its termination.
Item 9.01 Financial Statements and Exhibits.
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(d)
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Exhibits
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Item No.
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Description
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10.1*
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Loan Agreement between NLKW Holding, LLC, as Borrower, and
Valhi, Inc., as Lender, dated as of November 14, 2016. |
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10.2*
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Pledge and Security Agreement made by and between NLKW
Holding, LLC in favor of Valhi, Inc., dated as of November 14, 2016. |
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10.3*
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Back-to-Back Loan Agreement between the registrant, as
Borrower, and NLKW Holding, LLC, as Lender, dated as of November 14, 2016. |
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| 10.4* |
Back-to-Back Pledge and Security Agreement made by and between the registrant in favor of Valhi, Inc., dated as of November 14, 2016. |
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Filed herewith.
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About NL Industries, Inc. (NL)