On January 5, 2018, VSE and a majority of its wholly owned subsidiaries (collectively, the "Borrowers") entered into a Fourth Amended and Restated Business Loan and Security Agreement (the "Current Loan Agreement") with Citizens Bank of Pennsylvania and a syndicate of eight other banks ("Lenders"), including three new Lenders. The Current Loan Agreement amends and restates VSE's prior Third Amended and Restated Business Loan Agreement, dated as of January 28, 2015, with Citizens Bank of Pennsylvania and other Lenders (the "Previous Loan Agreement"). VSE entered into the Current Loan Agreement to refinance its outstanding debt under the Previous Loan Agreement, to finance any permitted acquisitions and for working capital support, letters of credit, capital expenditures and general corporate purposes.

Under the Previous Loan Agreement, the outstanding principal balance under the company’s term loan facility was approximately $94.4 million. The company also had capacity of $150 million under its revolving loan facility. The Current Loan Agreement provides for a term loan facility of $100 million and a revolving loan facility of $300 million (which includes a sub-limit of $20 million for letters of credit), thereby providing an additional $155.60 million in committed funding. At closing, the company drew $79 million under the revolving loan facility.

The Current Loan Agreement also, among other changes, (i) extends the maturity date of both the term loan facility and the revolving loan facility from January 28, 2020 to January 5, 2023; (ii) amends (x) the interest rate margins for loans (whether at LIBOR or the Base Rate) and (y) the unused commitment fee on the unused portion of the revolving loan facility, with such margins and fee stepping down as the company reduces its leverage in accordance with revised leverage ratios; (iii) increases the amount of any incremental loan facilities from $75 million to $100 million in the aggregate for either the term loan facility, the revolving loan facility or both facilities, and (iv) adjusts the term loan facility principal payments to be made in accordance with a five-year amortization schedule under which payments are greater in the later years than in the earlier years. In addition, the Current Loan Agreement requires that VSE hedge the rate of interest on no less than 50%of the outstanding amount of the term facility for the first three years after the closing date.

The Current Loan Agreement is secured by substantially all of the assets of the Borrowers and contains certain financial covenants, including a total funded debt to EBITDA ratio and fixed charge coverage ratio, customary representations and warranties, and other affirmative and negative covenants. These include limitations or restrictions on indebtedness, change of control of VSE or any of its subsidiaries, purchases of VSE's common stock, payment of cash dividends in excess of $6 million in any fiscal year, loans or advances from the Borrowers, bid and performance bonds, financial product obligations, asset dispositions, and acquisitions. The Current Loan Agreement defines events of default and acceleration provisions.The foregoing description of the Current Loan Agreement does not constitute a complete summary of its terms and conditions, and reference is made to the complete text of the Current Loan Agreement that is attached hereto as Exhibit 10.1.

Item 9.01Financial Statements and Exhibits

(d) Exhibits

VSE CORP Exhibit
EX-10.1 2 vsec-ex101xamendedloanagre.htm EXHIBIT 10.1 AMENDED LOAN AGREEMENT Exhibit Exhibit 10.1FOURTH AMENDED AND RESTATEDBUSINESS LOAN AND SECURITY AGREEMENTdated as of January 5,…
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About VSE CORPORATION (NASDAQ:VSEC)

VSE Corporation is a services and supply company. The Company’s segments include Supply Chain Management Group, Aviation Group, Federal Services Group, and IT, Energy and Management Consulting Group. The Company provides logistics and distribution services for legacy systems and equipment and professional and technical services to the United States Government, including the United States Postal Service (USPS), the United States Department of Defense (DoD), federal civilian agencies, and to commercial and other customers. The Company’s service offerings include supply chain and inventory management services; vehicle fleet sustainment programs; vehicle fleet parts; maintenance, repair, and overhaul (MRO) of aircraft engines and engine components; aircraft engine parts supply and distribution; military equipment refurbishment and modification; ship maintenance, overhaul, and follow-on technical support; logistics management support, and machinery condition analysis.