Item 2.03
|
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
|
On June 29, 2016, L. B. Foster Company (the Company), its domestic subsidiaries, and certain of its Canadian
subsidiaries entered into the First Amendment (the First Amendment) to the Second Amended and Restated Credit Agreement dated March 13, 2015 (the Amended and Restated Credit Agreement), with PNC Bank, N.A., Bank of
America, N.A., Wells Fargo Bank, N.A., Citizens Bank of Pennsylvania, and Branch Banking and Trust Company. This First Amendment modifies the Amended and Restated Credit Agreement which had a maximum credit line of $335,000,000. The First Amendment
reduces the permitted borrowings to $275,000,000.
The Companys and the domestic guarantors obligations under the First Amendment will be
secured by the grant of a security interest by the domestic borrowers and domestic guarantors in substantially all of the personal property owned by such entities. Additionally, the equity interests in each of the domestic loan parties, other than
the Company, and the equity interests held by each domestic loan party in their domestic subsidiaries, will be pledged to the lenders as collateral for the lending obligations.
The First Amendment provides that liens on the collateral will be released upon satisfaction of certain conditions, including the submission by the loan
parties of a compliance certificate for two consecutive fiscal quarters, calculated for the four consecutive fiscal quarters then ending, each evidencing a Leverage Ratio (defined as the Companys indebtedness less cash on hand in excess of
$15,000,000, divided by the Companys consolidated EBITDA) of less than or equal to 2.75 to 1.00; provided that the last day of such two consecutive fiscal quarters cannot be earlier than June 30, 2018.
Certain financial covenants in the Credit Agreement are also amended. The First Amendment revises the maximum Leverage Ratio, which must not exceed the
amounts set forth below for applicable fiscal quarters: June 30, 2016 and September 30, 2016, 4.75 to 1.00; December 31, 2016, 4.5 to 1.00; March 31, 2017, 4.25 to 1.00; June 30, 2017, 4.00 to 1.00; September 30, 2017,
3.75 to 1.00; December 31, 2017, 3.5 to 1.00; and March 31 and all fiscal quarters ending thereafter, 3.25 to 1.00.
Borrowings under the First
Amendment will bear interest at rates based upon either the base rate or Euro-rate plus applicable margins. Applicable margins are dictated by the ratio of the Companys indebtedness less consolidated cash on hand to its consolidated EBITDA, as
defined in the underlying Amended and Restated Credit Agreement. The base rate is the highest of (a) PNC Banks prime rate, (b) the Federal Funds Rate plus 0.50% or (c) the daily Euro-rate (as defined in the Amended and Restated Credit
Agreement) plus 1.00%. The base rate and Euro-rate spreads range from 0.025% to 2.25% and 1.25% to 3.25% respectively.
Loans and advances to non-loan
parties and loans, advances, and investments by domestic loan parties to subsidiaries which are not loan parties and to foreign loan parties is not permitted to exceed $10,000,000 in the aggregate at any one time, provided that, on March 31,
2018, when the maximum Leverage Ratio requirement is 3.25 to 1.00, this limit will increase to $75,000,000.
The First Amendment permits the Company to
pay dividends, distributions and make redemptions with respect to its stock provided no event of default or potential default (as defined in the Amended and Restated Credit Agreement) has occurred prior to or after giving effect to the dividend,
distribution, or redemption. Dividends, distributions, and redemptions are capped at $4,000,000 per year when funds are drawn on the facility until March 31, 2018, when the maximum Leverage Ratio requirement is 3.25 to 1.00, at which time this
limit will increase to $25,000,000. If no drawings on the facility exist, dividends, distributions, and redemptions in excess of $4,000,000 (or $25,000,000, as appropriate) per year are subjected to a limitation of $75,000,000 in the aggregate. The
$75,000,000 aggregate limitation also permits certain loans, investments, and acquisitions.
The First Amendment provides that each of the loan parties
and their subsidiaries shall not enter in into any merger, consolidation, or other reorganization, or acquire all or substantially all of the assets, division, business, stock, or other ownership interests or permit any consolidation or merger with
an aggregate consideration in excess of $12,000,000 until after March 31, 2018.