Item 1.01.
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Entry into a Material Definitive Agreement.
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On April 10, 2017, IES Holdings, Inc.,
a Delaware corporation (IES or the Company), entered into the Second Amended and Restated Credit and Security Agreement (the Amended Credit Agreement), by and among the Company, each of the other borrowers and
guarantors named therein and Wells Fargo Bank, National Association.
Pursuant to the Amended Credit Agreement, the Companys maximum
revolver amount increased from $70 million to $100 million, and the maturity date of the revolving credit facility was extended from August 9, 2019 to August 9, 2021. The Amended Credit Agreement also modified the Companys
financial covenants by, among other items, implementing a new covenant that requires the Company to maintain a minimum EBITDA (as defined in the Amended Credit Agreement) that will be tested quarterly on a trailing twelve month basis; increasing the
minimum liquidity requirement applicable to the Company from 12.5% to 30% of the maximum revolver amount; raising the Companys required fixed charge coverage ratio (the FCCR) to 1.1:1.0 from 1.0:1.0; and requiring that the FCCR be
tested quarterly regardless of the Companys liquidity levels. In addition, the Amended Credit Agreement modified the amount available under the revolving credit facility by increasing the availability related to progress-billed receivables
that may be included in the Companys borrowing base from $25 million to $40 million, while reducing the credit on these receivables from 80% to 75%.
The Amended Credit Agreement also eliminated provisions related to the structured overadvance amount and early termination premium, increased
the aggregate cap on Company investments in certain securities from $10 million to $20 million, and permitted the Company to invest up to $10 million of that amount in
non-marketable
securities,
provided for the inclusion of certain real estate in the borrowing base, and allowed for a one time increase in restricted payments to permit the Company to make stock repurchases in connection with satisfaction of employee tax withholding
obligations on performance-based phantom stock due to vest in 2018. The Amended Credit Agreement continues to contain other customary affirmative, negative and financial covenants as well as events of default.
The representations and warranties of the borrowers party to the Amended Credit Agreement were made only for purposes of that agreement and as
of specific dates therein and were solely for the benefit of the lender party thereto. The Amended Credit Agreement is a contractual document that establishes and governs the legal relations among the parties thereto and is not intended to be a
source of factual, business, or operational information about the Company or its subsidiaries. The representations and warranties made by the borrowers party to the Amended Credit Agreement may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors. Accordingly, investors and security holders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances.
The foregoing description of the Amended Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the
Amended Credit Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Certain statements in this
Current Report on Form
8-K
may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, all of
which are based upon various estimates and assumptions that the Company believes to be reasonable as of the date hereof. In some cases, you can identify forward-looking statements by terminology such as may, will,
could, should, expect, plan, project, intend, anticipate, believe, seek, estimate, predict, potential,
pursue, target, continue, the negative of such terms or other comparable terminology. These statements involve risks and uncertainties that could cause the Companys actual future outcomes to differ
materially from those set forth in such statements. Such risks and uncertainties include, but are not limited to, the ability of our controlling shareholder to take action not aligned with other shareholders; the possibility that certain tax
benefits of our net operating losses may be restricted or reduced in a change in ownership; the potential recognition of valuation allowances on net deferred tax assets; the inability to carry out plans and strategies as expected, including our
inability to identify and complete acquisitions that meet our investment criteria in furtherance of our corporate strategy; competition in the industries in which we operate, both from third parties and former employees, which could result in the
loss of one or more customers or lead to lower margins on new projects; fluctuations in operating activity due to downturns in levels of construction, seasonality and differing regional economic conditions; and our ability to successfully manage
projects, as well as other risk factors discussed in this document and in the Companys annual report on Form
10-K
for the year ended September 30, 2016. You should understand that such risk factors
could cause future outcomes to differ materially from those experienced previously or those expressed in such forward-looking statements. The Company undertakes no obligation to publicly update or revise any information, including information
concerning its controlling shareholder, net operating losses, borrowing availability, or cash position, or any forward-looking statements to reflect events or circumstances that may arise after the date of this release. Forward-looking statements
are provided in this Current Report on Form
8-K
pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of the estimates,
assumptions, uncertainties, and risks described herein. General information about IES Holdings, Inc. can be found at
http://www.ies-co.com
under Investors. The Companys annual report
on Form
10-K,
quarterly reports on Form
10-Q
and current reports on Form
8-K,
as well as any amendments to those reports, are
available free of charge through the Companys website as soon as reasonably practicable after they are filed with, or furnished to, the Securities and Exchange Commission.