COMMERCIAL VEHICLE GROUP, INC. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Settlement FD Disclosure, Financial Statements and Exhibits (Form 8-K)
Item 1.01. Conclusion of a significant definitive agreement.
Amendment to the credit agreement
May 12, 2022, Commercial Vehicle Group, Inc.(the "Company") and certain of its subsidiaries entered into a second amendment (the "Amendment") to its credit agreement (as so amended, the "Amended Credit Agreement") between, among others, Bank of America, N.A. as administrative agent (the "Administrative Agent") and other lenders party thereto (the "Lenders") pursuant to which the Lenders upsized the existing term loan facility to $175 millionin aggregate principal amount (the "Term Loan Facility") and increased the revolving credit facility commitments by $25 millionto an aggregate of $150 millionin revolving credit facility commitments (the "Revolving Credit Facility" and together with the Term Loan Facility, the "Credit Facilities"). Subject to the terms of the Amended Credit Agreement, the Revolving Credit Facility includes a $10 millionswing line sublimit and a $10 millionletter of credit sublimit. The Amended Credit Agreement provides for an incremental term facility agreement and/or an increase of the Revolving Credit Facility (together, the "Incremental Facilities"), in a maximum aggregate amount of (a) up to the date of receipt of financial statements for the fiscal quarter ending June 30, 2022, $75 million, and (b) thereafter, (i) $75 millionless the aggregate principal amount of Incremental Facilities incurred before such date, plus (ii) an unlimited amount if the pro forma consolidated total leverage ratio (assuming the Incremental Facilities are fully drawn) is less than 2.50:1.0. The Credit Facilities mature on May 12, 2027(the "Maturity Date"). The proceeds of the Credit Facilities will be used, together with cash on hand of the Company, to (a) pay transaction costs, fees and expenses incurred in connection therewith and in connection with the Amended Credit Agreement and (b) for working capital and other lawful corporate purposes of the Company and its subsidiaries. Interest Rates and Fees Amounts outstanding under the Credit Facilities and the commitment fee payable in connection with the Credit Facilities accrue interest at a per annum rate equal to (at the Company's option) the base rate or the Term SOFR (including a credit spread adjustment) plus a rate which will vary according to the Consolidated Total Leverage Ratio as set forth in the most recent compliance certificate received by the Administrative Agent, as set out in the following table: Consolidated Total Pricing Tier Leverage Ratio Commitment Fee
Letter of Credit Fee Term SOFR Loans Base Rate Loans
I > 3.50 to 1.0 0.35% 2.75% 2.75% 1.75% < 3.50 to 1.0 but II > 2.75 to 1.0 0.30% 2.50% 2.50% 1.50% < 2.75 to 1.0 but III > 2.00 to 1.0 0.25% 2.25% 2.25% 1.25% < 2.00 to 1.0 but IV > 1.50 to 1.0 0.20% 2.00% 2.00% 1.00% V < 1.50 to 1.0 0.15% 1.75% 1.75% 0.75% Guarantee and Security All obligations under the Amended Credit Agreement and related documents are unconditionally guaranteed by each of the Company's existing and future direct and indirect wholly owned material domestic subsidiaries, subject to certain exceptions (the "Guarantors"). All obligations of the Company under the Amended Credit Agreement and the guarantees of those obligations are secured by a first priority pledge of substantially all of the assets of the Company and of the Guarantors, subject to certain exceptions. The property pledged by the Company and the Guarantors includes a first priority pledge of all of the equity interests owned by the Company and the Guarantors in their respective domestic subsidiaries and a first priority pledge of the equity interests owned by the Company and the Guarantors in certain foreign subsidiaries, in each case, subject to certain exceptions.
Commitments and other conditions
The Amended Credit Agreement contains customary restrictive covenants, including, without limitation, limitations on the ability of the Company and its subsidiaries to incur additional debt and guarantees; grant certain liens on assets; pay dividends or make certain other distributions; make certain investments or acquisitions; dispose of certain assets; make payments on certain indebtedness; merge, combine with any other person or liquidate; amend organizational documents; make material changes in accounting treatment or reporting practices; enter into certain restrictive agreements; enter into certain hedging agreements; engage in transactions with --------------------------------------------------------------------------------
affiliates; participate in certain benefit plans; make acquisitions; and other matters usually included in senior secured loan agreements.
The Amended Credit Agreement also contains customary reporting and other affirmative covenants, as well as customary events of default, including, without limitation, nonpayment of obligations under the Credit Facilities when due; material inaccuracy of representations and warranties; violation of covenants in the Amended Credit Agreement and certain other documents executed in connection therewith; breach or default of agreements related to material debt; revocation or attempted revocation of guarantees; denial of the validity or enforceability of the loan documents or failure of the loan documents to be in full force and effect; certain material judgments; certain events of bankruptcy or insolvency; certain Employee Retirement Income Securities Act events; and a change in control of the Company. Certain of the defaults are subject to exceptions, materiality qualifiers, grace periods and baskets customary for credit facilities of this type. The Amended Credit Agreement includes (a) a minimum consolidated fixed charge coverage ratio of 1.20:1.0, and (b) a maximum consolidated total leverage ratio of 3.75:1.0 (which will be subject to step-downs to 3.50:1.0 at the end of the fiscal quarter ending
March 31, 2023; to 3.25:1.0 at the end of the fiscal quarter ending June 30, 2023; and to 3.00:1.0 for each fiscal quarter on and after the fiscal quarter ending September 30, 2023).
Refund and prepayment
The Amended Credit Agreement requires the Company to make quarterly amortization payments to the Term Loan Facility at an annualized rate of the loans under the Term Loan Facility for every year as follows: 5.0%, 7.5%, 10.0%, 12.5% and 15%. The Amended Credit Agreement also requires all outstanding amounts under the Credit Facilities to be repaid in full on the Maturity Date. The Amended Credit Agreement requires mandatory prepayments from the receipt of proceeds of dispositions or debt issuance, subject to certain exceptions and . . .
Section 2.03. Creation of a direct financial obligation or an obligation under an off-balance sheet arrangement of a registrant.
The information set forth in Section 1.01 of this Current Report on Form 8-K is incorporated by reference in this Section 2.03.
Item 7.01. FD Regulation Disclosure.
May 18, 2022, the Company issued a press release announcing the aforementioned transactions described above. A copy of this press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial statements and supporting documents.
(d) Exhibit Exhibit No. Description 10.1 Second Amendment dated
May 12, 2022to the Credit
Agreement, dated April
30, 2021 between, among others, the Company,
Bank of America, N.A. as administrative agent and other lenders party thereto. 99.1 Press release of the Company May 18, 2022.
Caution Regarding Forward-Looking Information
This Current Report on Form 8-K contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as "believe", "anticipate", "plan", "expect", "intend", "will", "should", "could", "would", "project", "continue", "likely", and similar expressions. In particular, this Current Report (including the press release furnished herein) may contain forward-looking statements about the Company's expectations for future periods with respect to its plans to improve financial results, the future of the Company's end markets, including the short-term and long-term impact of the COVID-19 pandemic on our business, changes in the Class 8 and Class 5-7
North Americatruck build rates, performance of the global construction equipment business, the Company's prospects in the wire harness, warehouse automation and electric vehicle markets, the Company's initiatives to address customer needs, organic growth, the Company's strategic plans and plans to focus on certain segments, completion faced the Company, volatility in and disruption to the global economic environment and the Company's financial position or other financial information. These statements are based on certain assumptions that the Company has made in light of its experience as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including those included in the Company's filings with the SEC. There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.
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