ORCHIDS PAPER PRODUCTS COMPANY (NYSEMKT:TIS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On April 11, 2017, Orchids Paper Products Company (the Company)
entered into Amendment No. 4 (the Credit Agreement Amendment) to
its SecondAmended and Restated Credit Agreementdated June 25,
2015 by and among the Company, U.S. Bank National Association
(U.S. Bank) and the other lenders party thereto (the Credit
Agreement).
The Credit Agreement Amendment, among other things, (i) amends
the financial covenant in the Credit Agreement related to
maintenance of a maximum fixed charge coverage ratio by revising
the calculation of the fixed coverage charge ratio and the
permitted fixed coverage charge ratio; (ii) amends the financial
covenant in the Credit Agreement related to maintenance of a
maximum total leverage ratio by increasing the permitted total
leverage ratio for fiscal quarters ending on or prior to March
31, 2018; and (iii) amends the terms of the Draw Loan (as defined
in the Credit Agreement) to (a) provide for an earlier advance to
the Company for the purposes of improving real estate and (b) to
provide for an extended period of time during which advances are
available to the Company for the purposes of acquiring equipment.
More particularly:
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The maximum twelve-month rolling fixed charge coverage ratio is lowered to 1.0:1 and 1.05:1 for the quarters ended June 30, 2017 and September 30, 2017, respectively, prior to reverting to 1.2:1 as originally scheduled. |
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The Fixed Charge Coverage Ratio was amended by setting the Maintenance Capital Expenditure (as defined in the Credit Agreement) as $4.25 million rather than as fifty percent of consolidated depreciation expense and by creating a Cash Flow Reserve (as defined in the Credit Agreement). The Credit Agreement Amendment also defines various means of meeting the improvement in cash flows to create the Cash Flow Reserve. |
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The maximum twelve-month rolling leverage ratio is waived in the first two quarters of 2017 and allowed to increase to 5.5:1 at September 30, 2017 prior to being decreased to 4.5:1 at December 31, 2017 and reverting to 3.5:1 as originally scheduled. The leverage ratios permitted under the Credit Agreement Amendment as of December 31, 2016 and each quarter-end through and including March 31, 2018 are respectively: 5:1, N/A, N/A, 5.5:1, 4.5:1, and 3.5:1. |
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The funding-advance for the Barnwell, South Carolina, mill building was made concurrent with its actual completion in April of 2017. |
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The period during which funds may be drawn under the Draw Loan is extended to December 25, 2017. |
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A Fee of 0.25% of the Credit Facility was paid to the Lenders. This amounted to $437,750. Inclusive of legal fees, the cost was approximately $453,000. |
Obligations under theCredit Agreementremain secured by
substantially all of the Companys assets.Also, the Credit
Agreement continues to include representations and warranties,
and affirmative and negative covenants customary for financings
of this type, including, but not limited to, limitations on
additional borrowings, additional investments and asset sales.
On April 11, 2017, and in conjunction with the Credit Agreement
Amendment, the Company also amended the loan agreement (the NMTC
Loan Agreement) by and among the Companys wholly owned
subsidiaries and certain Community Development Financial
Institutions relating to the Companys participation in the New
Market Tax Credits program of the Internal Revenue Code in order
to align the NMTC Loan Agreement with the Credit Agreement. The
amendment to the NMTC Loan Agreement incorporated the same
substantive changes as the Credit Agreement Amendment.
The foregoing summaries are not complete and are qualified in
their entirety by reference to the full text of the Amendments
attached to this Form 8-K.
Item2.03.Creation of a Direct Financial Obligation or an
Obligation under and Off-Balance Sheet Arrangement of a
Registrant.
The information provided in Item 1.01 of this Form 8-K is
incorporated by reference.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits. See the Exhibit Index which is hereby incorporated
by reference.
About ORCHIDS PAPER PRODUCTS COMPANY (NYSEMKT:TIS)
Orchids Paper Products Company is a supplier of consumer tissue products. The Company produces bulk tissue paper, known as parent rolls, and converts parent rolls into finished products, including paper towels, bathroom tissue and paper napkins. The Company offers customers a range of private label products across the value, premium and ultra-premium market segments. The Company sells its products to grocery stores, grocery wholesalers and cooperatives, convenience stores, janitorial supply stores and stores in the food service market. The Company’s products are sold primarily under its customers’ private labels and, to a lesser extent, under its brand names, such as Orchids Supreme, Clean Scents, Tackle, Colortex, My Size, Velvet and Big Mopper. The Company sells its products under private labels to its core customer base in the at home market, which consists primarily of dollar stores, discount retailers and grocery stores that offer alternatives across a range of products. ORCHIDS PAPER PRODUCTS COMPANY (NYSEMKT:TIS) Recent Trading Information
ORCHIDS PAPER PRODUCTS COMPANY (NYSEMKT:TIS) closed its last trading session up +0.09 at 23.02 with 117,472 shares trading hands.