Power Solutions International, Inc. (NASDAQ:PSIX) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement. |
Power Solutions International, Inc. (the Company) closed on its
previously reported share purchase agreement with Weichai America
Corp. (Weichai or the Purchaser), dated as of March20, 2017 (the
Purchase Agreement). Upon consummation of the transactions
governed thereby on March31, 2017, Weichai invested $60 million
in exchange for common stock, a new series of preferred stock and
a warrant to purchase common stock. Please refer to the Companys
Form 8-K filed on March27, 2017 (the Prior Form 8-K) for a
description of the Purchase Agreement and related agreements and
the transactions governed thereby.
Third Supplemental Indenture
In connection with the closing on the Purchase Agreement, the
Company entered into a third supplemental indenture (the Third
Supplemental Indenture) to the indenture (Indenture) governing
its $55.0 million 6.50% senior notes due 2018 (the Notes). The
Third Supplemental Indenture extends the maturity on the Notes
until January1, 2019. The Third Supplemental Indenture amended
certain permitted holder, change of control and permitted
indebtedness and payment definitions to permit the issuance of
the securities to Weichai under the Purchase Agreement. It also
amended provisions related to affiliated transactions to permit
ongoing transactions with an affiliate of Weichai under the
Strategic Collaboration Agreement that was entered into in
connection with the Purchase Agreement. Finally, the provisions
related to ongoing financial reporting obligations were amended
to extend the deadline for the Company to file its delinquent
periodic reports and current year periodic reports until the date
the Companys annual report on Form 10-K for the fiscal year ended
December31, 2017 must be filed with the SEC in accordance with
applicable SEC regulations.
The foregoing description of the Third Supplemental Indenture is
not complete and is qualified in its entirety by reference to the
Third Supplemental Indenture, a copy of which is attached hereto
as Exhibit 4.1, and is incorporated herein by reference.
Second Amended and Restated Credit Agreement with Wells
Fargo
The Company also entered into in connection with the closing a
third amendment, consent and waiver (the Third Amendment) to the
second amended and restated credit agreement, by and between the
Company and Wells Fargo Bank, National Association, as agent for
the lenders party thereto (Wells Fargo), dated as of June28,
2016, as amended by the first amendment and waiver thereto, dated
August22, 2016 and as amended by the second amendment and waiver
thereto, dated December19, 2016 (as amended, the Wells Fargo
Agreement). The Third Amendment modified certain change in
control and other definitions to permit the issuance of the
securities to Weichai under the Purchase Agreement and the payoff
of the term loan discussed below. The amendment also increased
the interest rate by 200 basis points (2%)until the Companys
restated audited financial statements for fiscal year ending
December31, 2016 have been provided to Wells Fargo, reduced the
size of the asset based revolving facility to $65 million and
moved up the maturity date to March31, 2018 (or February15, 2018
if the preferred stock issued to Weichai has not converted into
common stock). Certain adjustments to the borrowing base
provisions were made to the assets against which borrowings may
be made. The amendment also contains permanent waivers of certain
representations, required information and other defaults.
Finally, the provisions related to ongoing financial reporting
obligations were amended to extend the deadline for the Company
to file its delinquent periodic reports and current year periodic
reports until the date the Companys annual report on Form 10-K
for the fiscal year ended December31, 2017 must be filed with the
SEC in accordance with applicable SEC regulations.
The foregoing description of the Third Amendment is not complete
and is qualified in its entirety by reference to the Third
Amendment, a copy of which is attached hereto as Exhibit 10.1,
and is incorporated herein by reference.
Credit Agreement with TPG
Finally, on March31, 2017, upon consummation of the Purchase
Agreement transactions, the Company paid off in full the
outstanding $60 million term loan due under that certain credit
agreement, by and between the Company, TPG Specialty Lending,
Inc. and the lenders party thereto, dated as of June28, 2016, as
amended. The Company used proceeds from the sale of securities to
the Purchase Agreement and borrowings under the Wells Fargo
Agreement to pay off the outstanding term loan.
| Item2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information provided in Item1.01 of this Current Report is
incorporated herein by reference.
| Item5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
to an investor rights agreement (the Rights Agreement) and a
shareholders agreement (the Shareholders Agreement) entered into
by the Company and Weichai upon consummation of the closing of
the transactions governed by the Purchase Agreement, effective
March31, 2017, the Company increased the size of its board of
directors (the Board) to seven members. Subsequently, at a
meeting of the Board on April1, 2017, two nominees designated by
the Purchaser to the Rights Agreement were appointed as
directors, Shaojun Sun and Jiang Kui. As contemplated by the
agreements with Weichai and consistent with his commitment to
facilitate a reconstitution of the Board, Gary Winemaster
resigned as chairman of the Board and the Board appointed Mr.Sun
to serve as chairman. In addition, Messrs. Sun and Kui were
appointed as members of the compensation committee, and Mr.Kui
was appointed as a member of the nominating and governance
committee, of the Board.
Mr.Shaojun Sun is an executive director and executive president
of Weichai Power Co., Ltd. Mr.Sun joined Weifang Diesel Engine
Factory in 1988 and has held the positions of supervisor of the
engineering department, the chief engineer of Weifang Diesel
Engine Factory, and director of Torch Automobile Group Co., Ltd.
Mr.Sun is currently a director of Weichai Group Holdings Limited
and Weichai Heavy-duty Machinery Co., Ltd. Mr.Sun is a
researcher-grade senior engineer and holds a doctorate degree in
engineering. He was appointed as Taishan Mountain scholar
specialist by Shandong Peoples Government.
Mr.Jiang Kui is a non-executive director of Weichai Power Co.,
Ltd. He has held various positions including engineer and deputy
general manager of Assembly Department of Shandong Bulldozer
General Factory, deputy general manager of Shantui Import and
Export Company, deputy director, director of manufacturing
department, deputy general manager and director of Shantui
Engineering Machinery Co., Ltd., deputy general manager of
Shandong Engineering Machinery Group Co., Ltd., executive deputy
general manager and vice chairman of Weichai Group Holdings
Limited, chairman of Shanzhong Jianji Co., Ltd. and director of
Shandong Heavy Industry Group Co., Ltd. He is now the president
of Shandong Heavy Industry Group Co., Ltd. He is a senior
engineer and holds an MBA degree.
Other than the Purchase Agreement, the Rights Agreement and the
Shareholders Agreement, there are no arrangements or
understandings to which Messrs. Sun and Kui were appointed to the
Board. Since the beginning of the Companys last fiscal year,
there have been no related-party transactions between the Company
and Messrs. Sun or Kui that would be reportable under Item404(a)
of Regulation S-K under the Securities Act. Please refer to the
Prior Form 8-K for a description of the Purchase Agreement, the
Rights Agreement and the Shareholders Agreement, including the
terms applicable to the appointment of Messrs. Sun and Kui as
directors and the Purchasers right to nominate directors for
election to the Board.
| Item5.03 |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
In connection with the closing of the Purchase Agreement, the
Company filed the certificate of designation of series B
convertible perpetual preferred stock with the Secretary of State
of the State of Delaware (the Certificate of Designation). Please
refer to the Prior Form 8-K for a description of the rights,
powers and preferences of the preferred stock issued under the
Certificate of Designation.
| Item7.01 | Regulation FD Disclosure. |
On April3, 2017, the Company issued a press release regarding the
Purchase Agreement closing and related matters as further
described in this Form 8-K. A copy of the press release is
furnished as Exhibit 99.1 to this Form 8-K.
Caution Regarding Forward-Looking Statements
This Form 8-K includes information that constitutes
forward-looking statements. Forward-looking statements often
address our expected future business and financial performance,
and often contain words such as believe, expect, anticipate,
intend, plan, or will. By their nature, forward-looking
statements address matters that are subject to risks and
uncertainties. Any such forward-looking statements may involve
risk and uncertainties that could cause actual results to differ
materially from any future results encompassed within the
forward-looking statements. Factors that could cause or
contribute to such differences include: the final results of the
Audit Committees internal review as it impacts the Companys
accounting, accounting policies and internal control over
financial reporting; the reasons giving rise to the resignation
of the Companys prior independent registered public accounting
firm; the time and effort required to complete the restatement of
the affected financial statements and amend the related Form 10-K
and Form 10-Q filings; the Nasdaq Hearing Panels decision and
inability to file delinquent periodic reports within the
deadlines imposed by Nasdaq and the potential delisting of the
Companys common stock from Nasdaq and any
adverse effects resulting therefrom; the subsequent discovery of
additional adjustments to the Companys previously issued
financial statements; the timing of completion of necessary
re-audits, interim reviews and audits by the new 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; risks relating to the
substantial costs and diversion of personnels attention and
resources deployed to address the financial reporting and
internal control matters and related class action litigation; the
impact of the resignation of the Companys former independent
registered public accounting firm on the Company relationship
with its lender and trade creditors and the potential for
defaults and exercise of creditor remedies and the implications
of the same for its strategic alternatives process; the impact of
the previously disclosed investigation initiated by the SEC and
any related or additional governmental investigative or
enforcement proceedings. Actual events or results may differ
materially from the Companys expectations. The Companys
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.
Item9.01 Financial Statements and Exhibits.
(d) Exhibits
The Exhibit Index appearing immediately after the page to this
report is incorporated herein by reference.
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. Power Solutions International, Inc. (NASDAQ:PSIX) Recent Trading Information
Power Solutions International, Inc. (NASDAQ:PSIX) closed its last trading session down -0.49 at 9.35 with 71,465 shares trading hands.