Power Solutions International, Inc. (NASDAQ:PSIX) Files An 8-K Entry into a Material Definitive Agreement

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Power Solutions International, Inc. (NASDAQ:PSIX) Files An 8-K Entry into a Material Definitive Agreement

Power Solutions International, Inc. (NASDAQ:PSIX) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01

On April 2, 2020, Power Solutions International, Inc. (the “Company”) closed on its new senior secured revolving credit facility (the “Credit Facility”) to that certain credit agreement, dated as of March 27, 2020, between the Company and Standard Chartered Bank, as administrative agent (the “Credit Agreement”). The Credit Agreement, which allows the Company to borrow up to $130 million, matures on March 26, 2021, with an optional 60-day extension. As part of the closing of the new Credit Facility, the Company made an initial draw in the amount of $95 million.

The Company utilized amounts drawn under the Credit Facility (i) to fully redeem and discharge $55 million in aggregate outstanding principal amount of the Company’s unsecured 7.5% Senior Notes due June 2020 and pay related interest, (ii) to repay the outstanding balance of approximately $17 million on the Company’s prior credit agreement, dated June 28, 2013, by and among the Company, the subsidiaries of the Company party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Prior Credit Agreement”) and (iii) for general corporate purposes. The Prior Credit Agreement was terminated in connection with the repayment of the outstanding balance.

After this utilization, on April 2, 2020, the Company had availability under the Credit Facility of $35 million and a cash balance of approximately $16 million. These amounts reflect a net positive cash impact from customer prepayments of approximately $17 million. The remaining available balance under the Credit Facility may be used for general corporate purposes.

The obligations under the Credit Agreement are unconditionally guaranteed, on a joint and several basis, by certain wholly-owned, existing and subsequently acquired or formed direct and indirect domestic subsidiaries of the Company, subject to customary exceptions. The obligations under the Credit Agreement are secured by substantially all of the assets of the Company and the Company’s wholly-owned subsidiaries.

Borrowings under the Credit Facility bear interest, at the option of the Company, at an annual rate equal to either (a) the base rate as defined in the Credit Agreement or (b) on the London Interbank Offered Rate (“LIBOR”) plus 2.00% per annum.

The Credit Agreement is subject to customary events of default and covenants, including requiring the Company to maintain minimum adjusted EBITDA levels and a minimum interest coverage ratio.

The description of the Credit Agreement set forth above does not purport to be complete and is subject to and qualified in its entirety by reference to the text of the Credit Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

On April 6, 2020, the Company issued a press release announcing the closing of the Credit Facility, which is attached as Exhibit 99.1 hereto.

The information contained in this Item 7.01 and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by reference in such a filing.

Caution Regarding Forward-Looking Statements

This Form 8-K contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are entitled to the safe-harbor provisions of Section 21E of the Exchange Act. The Company has tried to identify these forward-looking statements by using words such as “anticipate,” “believe,” “budgeted,” “contemplate,” “estimate,” “expect,” “forecast,” “guidance,” “may,” “outlook,” “plan,” “projection,” “should,” “target,” “will,” “would,” or similar expressions, but these words are not the exclusive means for identifying such statements. These statements are subject to a number of risks, uncertainties, and assumptions that may cause actual results, performance or achievements to be materially different from those expressed in, or implied by, such statements. The Company cautions that the risks, uncertainties and other factors that could cause its actual results to differ materially from those expressed in, or implied by, the forward-looking

statements, include, without limitation: management’s ability to successfully implement the Audit Committee’s remedial recommendations; the time and effort required to complete its delinquent financial statements and prepare the related Form 10-Q filings, particularly within the current anticipated timeline; the timing of completion of necessary interim reviews and audits by the Company’s independent registered public accounting firm; the timing of completion of steps to address, and the inability to address and remedy, material weaknesses; the identification of additional material weaknesses or significant deficiencies; variances in non-recurring expenses; risks relating to the substantial costs and diversion of personnel’s attention and resources deployed to address the financial reporting and internal control matters; the ability of the Company to accurately budget for and forecast sales, and the extent to which sales result in recorded revenues; changes in customer demand for the Company’s products; volatility in oil and gas prices; the impact of the U.S. tariffs on imports from China on the Company’s supply chain to source products; the impact of the investigations being conducted by United States Securities and Exchange Commission (“SEC”), and the criminal division of the United States Attorney’s Office for the Northern District of Illinois and any related or additional governmental investigative or enforcement proceedings; any delays and challenges in recruiting key employees consistent with the Company’s plans; the impact the coronavirus pandemic could have on the Company’s business and financial results; any negative impacts from delisting of the Company’s Common Stock from the NASDAQ Stock Market and any delays and challenges in obtaining a re-listing on a stock exchange; and the risks and uncertainties described in reports filed by the Company with the SEC, including without limitation its Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The Company’s forward-looking statements are presented as of the date hereof. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

(d) Exhibits

10.1    Credit Agreement, dated as of March 27, 2020, between the Company and Standard Chartered Bank, as administrative agent.
99.1    Press Release, dated April 6, 2020, announcing the Credit Agreement.


POWER SOLUTIONS INTERNATIONAL, INC. Exhibit
EX-10.1 2 d904460dex101.htm EX-10.1 EX-10.1 Exhibit 10.1       CREDIT AGREEMENT dated as of March 27,…
To view the full exhibit click here

About Power Solutions International, Inc. (NASDAQ:PSIX)

Power Solutions International, Inc. is a producer and distributor of a range of low-emission power systems that run on non-diesel fuels, such as natural gas, propane and gasoline. The Company’s industrial power systems are used by original equipment manufacturers (OEMs) in a range of industries with a diversified set of applications, including stationary electricity generators, oil and gas equipment, forklifts, aerial work platforms, industrial sweepers, arbor equipment, agricultural and turf equipment, aircraft ground support equipment, construction and irrigation equipment, and other industrial equipment. The Company provides alternative fuel power systems for OEMs of off-highway industrial equipment and on-road medium trucks and busses. In addition to its emission-certified power systems, the Company produces and distributes non-emission-certified power systems for industrial OEMs for particular applications in markets without emission standards.