INDUSTRIES VALMONT INC: Conclusion of a material definitive agreement, creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant, financial statements and supporting documents (Form 8-K)
Article 1.01. The conclusion of an important definitive agreement.
October 18, 2021, Valmont Industries, Inc.(the "Company") and its wholly-owned subsidiaries Valmont Industries Holland B.V.and Valmont Group Pty. Ltd., as Borrowers, entered into a Second Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto (the "Restated Credit Agreement"). The Restated Credit Agreement amends and restates the First Amended and Restated Credit Agreement dated as of October 18, 2017among the Borrowers, the Administrative Agent and the other lenders party thereto (as amended, the "Original Credit Agreement").
Changes to the original credit agreement, which are adopted in the restated credit agreement, include:
a. an increase in commitments under the credit facility of
b. an increase in the accordion under the credit facility of
c. an extension of the maturity date of the credit facility
d. replacing LIBOR as the benchmark interest rate with SOFR (as explained in more detail below);
e.the addition of sustainability pricing adjustments to interest rates and commitment fees based on certain key performance indicators (KPIs). The KPIs are carbon intensity (ratio of Metric tons of CO2 per
one million dollarsof revenue for each fiscal year) and electricity usage (ratio of Megawatt Hours per one million dollarsof revenue for each fiscal year), and the Company's performance against certain targets could result in (a) a two and one-half basis point reduction, no change or a two and one-half basis point increase in interest rates per KPI and (b) a one-half basis point reduction, no change or a one-half basis point increase in commitment fees per KPI; f.a modification of the definition of "EBITDA" to add-back any non-cash stock based compensation in any trailing twelve month period (the term "EBITDA" is used in the computation of Leverage Ratio (Total Indebtedness / EBITDA) under the Restated Credit Agreement);
ga modification of the leverage ratio to deduct cash not subject to
h. removal of the interest coverage rate (EBITDA / Interest charges); and
i. update the Recast Credit Agreement with certain market provisions.
The updated credit agreement
The Restated Credit Agreement provides for an
$800 millioncommitted unsecured revolving credit facility, up to $400 millionof which will be available for borrowings in foreign currencies. The Company may increase the credit facility by up to an additional $300 millionat any time, subject to lenders increasing the amount of their commitments. The obligations arising under the Restated Credit Agreement are guaranteed by the Company and its wholly-owned subsidiaries Valmont Telecommunications, Inc.(f/k/a PiRod, Inc.), Valmont Coatings, Inc., Valmont Newmark, Inc.and Valmont Queensland Pty. Ltd.
Borrowings under the Updated Credit Agreement will bear interest, payable quarterly, monthly or at the end of any interest period (depending on the type of loan), at the Company’s option, either:
SOFR term (based on interest periods of 1, 3 or 6 months, as selected by the Company) plus an adjustment of 10 basis points plus a spread of 100 to 162.5 basis points, depending on the the Company’s senior unsecured debt credit rating; long-term debt;
b.the higher of (i) the prime lending rate, (ii) an overnight bank rate plus 50 basis points and (ii) term SOFR (based on a 1 month interest period) plus a 110 basis point adjustment plus, in each case, a spread of 0 to 62.5 basis points, depending on the credit rating of the Company's senior, unsecured, long-term debt; or --------------------------------------------------------------------------------
c. simple daily SOFR plus an adjustment of 10 basis points plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company’s senior unsecured long-term debt.
A commitment fee, payable quarterly, is also required under the Restated Credit Agreement which accrues at 10 to 25 basis points, depending on the credit rating of the Company's senior, unsecured, long-term debt, on the average daily unused portion of the commitments under the Restated Credit Agreement. Following the removal of the Interest Coverage Ratio (as discussed above), the only financial covenant within the Restated Credit Agreement is a Leverage Ratio. The Restated Credit Agreement requires maintenance of a Leverage Ratio, measured as of the last day of each fiscal quarter of the Company, of 3.50:1 or less. The Leverage Ratio is permitted to increase from 3.50:1 to 3:75:1 for the four consecutive fiscal quarters after certain material acquisitions. The Restated Credit Agreement also contains customary affirmative and negative covenants for credit facilities of this type, including, among others, limitations on the Company and its subsidiaries with respect to indebtedness, liens, mergers and acquisitions, investments, dispositions of assets, restricted payments, transactions with affiliates and prepayments of indebtedness. The Restated Credit Agreement also provides for acceleration of the obligations thereunder and exercise of other enforcement remedies upon the occurrence of customary events of default (subject to customary grace periods, as applicable). In connection with the Restated Credit Agreement, (a)
Bank of America, N.A., Citibank, N.A., Wells Fargo Bank, N.A.and U.S. Bank National Associationacted as Syndication Agents, (b) JPMorgan Chase Bank, N.A., BOFA Securities, Inc., Citibank, N.A., U.S. Bank National Associationand Wells Fargo Securities, LLCacted as Joint Bookrunners and Joint Lead Arrangers, (c) Australia and New Zealand Banking Group Limited acted as Co-Documentation Agent and (d) J.P. Morgan Securities LLCacted as Sustainability Structuring Agent. Some of the lenders in the Restated Credit Agreement and / or their affiliates have other business relationships with the Company involving the provision of financial and bank-related services, including cash management services and letters of credit, and have participated in the Company's prior credit agreements and sales of debt.
Certain of the terms used herein (including leverage ratio, total indebtedness and EBITDA) have the specific meanings given to them in the Updated Credit Agreement.
The foregoing description of the Updated Credit Agreement is qualified in its entirety by reference to the Updated Credit Agreement, which is filed as Exhibit 10.1 hereof and incorporated herein by reference.
Article 2.03. Creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant.
The information reported in section 1.01 above is incorporated herein by reference.
Article 9.01. Financial statements and supporting documents.
(d) Exhibits. Exhibit No. Description 10.1 Second Amended and Restated Credit Agreement, dated as of
October 18, 2021, among the Company, Valmont Industries Holland B.V.and Valmont Group Pty. Ltd., as Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto. 104 Cover Page Interactive File (the cover page
XBRL tags are integrated into the
Inline XBRL document).
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