Phibro Animal Health Corporation (NASDAQ:PAHC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On June 29, 2017, Phibro Animal Health Corporation (the Company),
together with certain of its subsidiaries acting as guarantors
(the Guarantors), entered into a Credit Agreement (the Credit
Agreement) with Bank of America, N.A. (Bank of America), as
Administrative Agent, Collateral Agent and L/C Issuer and each
lender from time to time party thereto (the Lenders). Under the
Credit Agreement, the Lenders agreed to extend credit to the
Company in the form of (i) Term A loans in an aggregate principal
amount equal to $250,000,000 (the Term A Loans) and (ii) a
revolving credit facility in an aggregate principal amount of
$250,000,000 (the Revolving Credit Facility, and together with
the Term A Loans, the Credit Facilities). The Revolving Credit
Facility contains a letter of credit facility.
At closing, the full amount of the Term A Loans were drawn and
$64.1 million of the Revolving Credit Facility was drawn.
The Credit Facilities replaced the Companys previous revolving
credit facility and Term B loan. The Company used amounts
borrowed at closing under the Credit Facilities to retire amounts
outstanding under the Companys previous revolving credit facility
and Term B loan and to pay fees and expenses of the transaction.
The Company expects its consolidated statements of operations for
the three months and year ending June 30, 2017, to include a loss
on extinguishment of debt of approximately $2.5 million, in
connection with the repayment of the previous credit facilities.
The Credit Facilities mature on June 29, 2022. The Term A Loans
are repayable in quarterly installments as set forth below, with
the balance payable at maturity.
| Payment Dates | Quarterly Installment Amounts | |||
|
September 30, 2017, December 31, 2017, March 31, 2018 and June 30, 2018 |
$ | 1,562,500 | ||
|
September 30, 2018, December 31, 2018, March 31, 2019 and June 30, 2019 |
$ | 3,125,000 | ||
|
September 30, 2019, December 31, 2019, March 31, 2020 and June 30, 2020 |
$ | 3,125,000 | ||
|
September 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021 |
$ | 4,687,500 | ||
|
September 30, 2021, December 31, 2021, March 31, 2022 and June 29, 2022 |
$ | 6,250,000 | ||
Subject to certain exceptions, the Term A Loans are subject to
mandatory prepayments in amounts equal to: (a)100% of the net
cash proceeds from any non-ordinary course sale or other
disposition of assets (including as a result of casualty or
condemnation) by the Company or its subsidiaries in excess of a
certain amount and subject to customary reinvestment provisions
and certain other exceptions and (b)100% of the net cash proceeds
from issuances or incurrences of debt by the Company or its
Subsidiaries (other than indebtedness permitted by the Credit
Agreement).
Borrowings under the Credit Facilities bear interest at rates
based on the ratio of the Company and its subsidiaries net
consolidated first lien indebtedness to the Company and its
subsidiaries consolidated EBITDA for applicable periods specified
in the Credit Facilities (the First Lien Net Leverage Ratio). The
interest rate per annum applicable to the loans under the Credit
Facilities will be based on a fluctuating rate of interest equal
to the sum of an applicable rate and, at the Companys election
from time to time, either (1)a base rate determined by reference
to the highest of (a)the rate as publicly announced from time to
time by Bank of America as its prime rate, (b)the federal funds
effective rate plus 0.50% and (c) one-month LIBOR plus 1.00%, or
(2) a Eurocurrency rate determined by reference to LIBOR with a
term as selected by the Company, of one day or one, two, three or
six months (or twelve months or any shorter amount of time if
consented to by all of the lenders under the applicable loan).
The Credit Facilities have applicable rates equal to (x) 1.00%,
in the case of base rate loans, and 2.00%, in the case of LIBOR
loans, if the First Lien Net Leverage Ratio is greater than
3.00:1.00, (y) 0.75%, in the case of base rate loans, and 1.75%,
in the case of LIBOR loans, if the First Lien Net Leverage Ratio
is less 3.00:1.00 but greater than or equal to 2.25:1.00, and (z)
0.50%, in the case of base rate loans, and 1.50%, in the case of
LIBOR loans, if the First Lien Net Leverage Ratio is less than
2.25:1.00.
The applicable rates under the Credit Facilities compare with the
Companys previous credit facilities as follows:
| Credit Facilities | Previous credit facilities | |||||||||||||||
| Applicable rates* | Applicable rates* | |||||||||||||||
| Base Rate loans | LIBOR loans | Base Rate loans | LIBOR loans | |||||||||||||
| Revolving Credit Facility | 0.50% – 1.00 | % | 1.50% – 2.00 | % | 1.50% – 2.00 | % | 2.50% – 3.00 | % | ||||||||
| Term A Loans | 0.50% – 1.00 | % | 1.50% – 2.00 | % | – | – | ||||||||||
| Term B Loans | – | – | 2.00 | % | 3.00 | % | ||||||||||
*range of applicable rates, depending upon the First Lien Net
Leverage ratio
The Company must pay the Administrative Agent a quarterly
commitment fee based upon the product of (i) the applicable rate
as described below and (ii) the actual daily amount by which the
aggregate revolving commitments exceed the sum of (A) the
outstanding revolving credit loans under the Revolving Credit
Facility and (B) obligations associated with any outstanding
Letters of Credit in the applicable quarterly period. The Company
also must pay the L/C Issuer letters of credit fees based upon
the amount available to be drawn under such letters of credit.
The applicable rate under the Credit Facilities with respect to
the commitment fee described in the immediately preceding
paragraph is equal to (x) 0.30% if the First Lien Net Leverage
Ratio is greater than 3.00:1.00, (y) 0.25%, if the First Lien Net
Leverage Ratio is less 3.00:1.00 but greater than or equal to
2.25:1.00, and (z) 0.20%, if the First Lien Net Leverage Ratio is
less than 2.25:1.00.
The Credit Facilities also contain customary financial and other
covenants, including: limitations on the ability of the Company
and its subsidiaries to incur debt or liens or make certain
investments and restricted payments, a requirement to maintain
certain leverage ratios, and certain restrictions on the sale of
assets. A violation of these covenants could result in the
Company being prohibited from making certain restricted payments,
including dividends, or cause a default under the Credit
Facilities, which would permit the participating lenders to
restrict the Companys ability to access the Revolving Credit
Facility and require the immediate repayment of any outstanding
advances made under the Credit Facilities.
The Credit Facilities will be secured by certain collateral,
subject to certain exceptions and thresholds, including:
(a)perfected first priority security interests in substantially
all tangible and intangible personal property and fee-owned real
property of the Company and each of the Guarantors and (b)a
perfected first priority pledge of (i)the equity interests of
each direct domestic restricted subsidiary of the Company and
each of the Guarantors and each of the Companys and the
Guarantors wholly owned material subsidiaries and (ii)65% of the
stock of each material first-tier foreign restricted subsidiary
(including a U.S. subsidiary whose primary assets consist of
equity in foreign restricted subsidiaries) of the Company and
each of the Guarantors.
The foregoing is a summary of the terms of the Credit Agreement,
and is qualified in its entirety by reference to the full text of
the Credit Agreement, a copy of which is attached as Exhibit
10.1, and is incorporated by reference herein.
The Credit Agreement has been included as an exhibit to this
Current Report on Form 8-K to provide you with information
regarding its terms. The Credit Agreement contains
representations and warranties that the parties thereto made to
the other parties thereto as of specific dates. The assertions
embodied in the representations and warranties in the Credit
Agreement were made solely for purposes of the contract among the
respective parties, and each may be subject to important
qualifications and limitations agreed to by the parties in
connection with negotiating the terms thereof. Moreover, some of
those representations and warranties may not be accurate or
complete as of any specified date, may be subject to a
contractual standard of materiality different from those
generally applicable to shareholders or may have been used for
the purpose of allocating risk among the parties rather than
establishing matters as facts.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN
OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A
REGISTRANT.
Credit Agreement
As discussed in Item 1.01 above, on June 29, 2017 the Company,
the Guarantors, Bank of America and the Lenders entered into the
Credit Agreement, which provides for the Term A Loans in an
aggregate principal amount equal to $250,000,000 and the
Revolving Credit Facility in an aggregate principal amount equal
to $250,000,000.
The description of the material terms of the Credit Agreement in
Item 1.01 is incorporated by reference in this Item 2.03, and is
qualified in its entirety by reference to the full text of the
Credit Agreement, a copy of which is attached hereto as Exhibit
10.1, and it incorporated by reference herein.
The information set forth under Item 1.01 of this report is
incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
| Exhibit Number | Description | |
| 10.1 | Credit Agreement, dated June 29, 2017 |
PHIBRO ANIMAL HEALTH CORP ExhibitEX-10.1 2 v469987_ex10-1.htm EXHIBIT 10.1 Exhibit 10.1 Execution Version Published Deal CUSIP: 71742TAD2 Revolver CUSIP: 71742TAE0 Term Loan CUSIP: 71742TAF7 CREDIT AGREEMENT Dated as of June 29,…To view the full exhibit click here About Phibro Animal Health Corporation (NASDAQ:PAHC)
Phibro Animal Health Corporation (Phibro) is a global diversified animal health and mineral nutrition company. The Company operates in three segments, which include Animal Health, Mineral Nutrition and Performance Products. The Company offers various products, which include Animal health products, such as antibacterials, anticoccidials, vaccines, nutritional specialty products and mineral nutrition products. The Company also manufactures and markets specific ingredients for use in the personal care, automotive, industrial chemical and chemical catalyst industries. The Company’s Medicated Feed Additives (MFAs) and other business consist of concentrated medicated products, which are administered through animal feeds. The Company’s MFAs and other business consists of the production and sale of antibacterials, including Stafac, Terramycin, Neo-Terramycin and Mecadox and anticoccidials, including Nicarb, Aviax, Aviax Plus, Coxistac and amprolium.