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Item 1.01.
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Entry into a Material Definitive Agreement
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Credit Agreement
On May 24, 2017, SunCoke Energy, Inc., as borrower (the “
Borrower
”), the several lenders party thereto from time to time
and Bank of America, N.A., as administrative agent, entered into a credit agreement which amended and restated the Borrower’s existing credit agreement, dated July 26, 2011 (as amended and restated, the “
Credit
Agreement
”).
The Credit Agreement provides for a $100 million secured credit facility allowing for the borrowing of revolving
loans and, subject to a $50 million sublimit, the issuance of letters of credit. Loans under the Credit Agreement bear interest, at the Borrower’s option, at a rate per annum equal to either the adjusted Eurodollar Rate (which is the London
Interbank Offered Rate (“
LIBOR
”), which cannot be less than zero, adjusted for eurocurrency reserve requirements) for interest periods of one, two, three or six months plus a specified margin, or the Alternate Base Rate, plus a
specified margin. The Alternate Base Rate is a fluctuating rate equal to the highest of (a) the Federal Funds Effective Rate (which cannot be less than zero) plus 0.50%, (b) the rate of interest publicly announced from time to time by Bank
of America as its “prime rate” and (c) LIBOR plus 1.0%. The specified margin ranges from 0.75% to 1.25% for loans bearing interest at the Alternate Base Rate and from 1.75% to 2.25% for loans bearing interest at the adjusted
Eurodollar Rate. The specified margin is calculated based upon the Borrower’s consolidated total leverage ratio from time to time.
Fees payable with respect to outstanding letters of credit range from 1.75% to 2.25% depending on the Borrower’s consolidated total
leverage ratio from time to time and a fronting fee of 0.25% per annum. Unused commitments are subject to a commitment fee of 0.40% per annum.
The Credit Agreement matures on May 24, 2022, at which time all amounts then outstanding under the Credit Agreement will become due.
Mandatory prepayments also will be required for certain sales of assets, certain events of loss, or incurrence of additional indebtedness not permitted under the Credit Agreement.
The Credit Agreement allows the Borrower, subject to certain conditions, to obtain up to $50 million of incremental revolving loans or term
loans subject to obtaining commitments from existing or additional lenders.
The Credit Agreement contains certain covenants, restrictions
and events of default including, but not limited to, limitations on the ability of the Borrower and its subsidiaries to (i) incur indebtedness, (ii) make distributions, (iii) prepay, redeem or repurchase certain debt, (iv) make
loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates and (viii) consolidate or merge.
The Credit Agreement also contains financial covenants requiring the Borrower and its consolidated subsidiaries to maintain:
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A maximum consolidated total funded debt to EBITDA ratio not to exceed 3.25 to 1.0 for any period of four consecutive fiscal quarters, commencing with the fiscal quarter ending June 30, 2017 and for every fiscal
quarter thereafter until the maturity of the Credit Agreement; and
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A minimum EBITDA to interest expense ratio not to be less than 2.75 to 1.0 for any period of four consecutive fiscal quarters, commencing with the fiscal quarter ending June 30, 2017 and for every fiscal quarter
thereafter until the maturity of the Credit Agreement.
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If an event of default (as such term is defined in the Credit Agreement) occurs, the
lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to
a secured creditor.
The obligations under the Credit Agreement are guaranteed by certain of the Borrower’s subsidiaries and secured
by liens on substantially all of the Borrower’s and the guarantors’ real and personal property assets pursuant to (i) an amended and restated guarantee and collateral agreement among the Borrower, the subsidiaries of the Borrower
party thereto and Bank of America, N.A, as administrative agent and collateral agent for the secured parties and (ii) mortgages and deeds of trust covering properties in Virginia.
The Borrower will use the proceeds of the Credit Facility to finance capital expenditures, acquisitions, working capital needs, the making of
distributions, the repayment of other indebtedness, and for other general corporate purposes.
A copy of the Credit Agreement is filed as
Exhibit 10.1
to this report and is incorporated by reference herein. The foregoing descriptions of the Credit Agreement is qualified in its entirety by reference to the actual terms of the Credit Agreement.