ITEM 1.01
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Entry Into a Material Definitive Agreement
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New Credit Facility
On August 18, 2016, Domtar Corporation (the Company) amended and restated its existing unsecured Amended and Restated Credit Agreement, dated
October 3, 2014 (the Existing Credit Agreement; as so amended and restated, the 2016 Credit Agreement), among the Company and certain of its subsidiaries (including certain Canadian and European subsidiaries that were
not borrowers under the Existing Credit Agreement), as borrowers, and the lenders and agents party thereto. The 2016 Credit Agreement matures on August 18, 2021.
Borrowings by US borrowers under the 2016 Credit Agreement are guaranteed by the Company and its significant domestic subsidiaries. Borrowings by foreign
borrowers under the 2016 Credit Agreement are guaranteed by the Company, the Companys significant domestic subsidiaries and certain of the Companys foreign significant subsidiaries. Unlike the Existing Credit Agreement, no insignificant
subsidiaries guarantee obligations of the borrowers under the 2016 Credit Agreement.
The maximum aggregate amount of availability under the 2016 Credit
Agreement is $700 million, an increase of $100 million from Existing Credit Agreement. Borrowings under the 2016 Credit Agreement will bear interest at the same rates as borrowings under the Existing Credit Agreement.
The 2016 Credit Agreement contains customary covenants and events of default for transactions of this type, including two financial covenants: (i) an
interest coverage ratio that must be maintained at a level of not less than 3.00 to 1 and (ii) a leverage ratio that must be maintained at a level of not greater than 3.75 to 1 (or 4.00 to 1 upon the occurrence of certain qualifying material
acquisitions). The other terms of the 2016 Credit Agreement are generally consistent with the terms of the Existing Credit Agreement.
Amended Farm
Credit Term Loan Agreement
On August 18, 2016, the Company entered into an amendment (the Amendment) to its Term Loan Credit
Agreement, dated July 20, 2015 (the Farm Credit Agreement), among the Company, Domtar Paper Company, LLC, as borrower (the Farm Credit Borrower), CoBank, ACB, as administrative agent, and the lenders and agents party
thereto and the related Guarantee Agreement, pursuant to which, among other things, certain subsidiaries of the Company that guaranteed the Farm Credit Borrowers obligations under the Farm Credit Agreement were designated as
insignificant subsidiaries and were released from their guarantees of the Farm Credit Borrowers obligations under the Farm Credit Agreement, as amended by the Amendment.
Release of Guarantors under the Indenture
The Company is
party to the Indenture, dated as of November 19, 2007, among the Company, The Bank of New York Mellon, as trustee, and the subsidiary guarantors party thereto from time to time (as previously supplemented and as may be further supplemented,
amended or otherwise modified, the Indenture). The Indenture requires that all domestic subsidiaries of the Company that guarantee indebtedness of the Company or its subsidiaries under the 2016 Credit Agreement or any other
indebtedness of the Company provide a guarantee of the Companys obligations under the Indenture (each such subsidiary providing a guarantee of the Companys obligations under the Indenture, a Subsidiary Guarantor). A
Subsidiary Guarantor is automatically released from its guarantee and other obligations under the Indenture if such Subsidiary Guarantor is released from all of its obligations under and its guarantees of indebtedness under the 2016 Credit Agreement
and all other indebtedness of the Company. The insignificant subsidiaries that guaranteed obligations under the Existing Credit Agreement and the Farm Credit Agreement, but do not guarantee obligations under the 2016 Credit Agreement, the Farm
Credit Agreement, as amended by the Amendment, or any other indebtedness of the Company, were automatically released from their guarantee and other obligations under the Indenture.