Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
On May 30, 2017, Hyster-Yale Group, Inc. (the "Term Loan Borrower" or Hyster-Yale Group"), along with Hyster-Yale Materials Handling, Inc. (“Hyster-Yale”) and certain subsidiaries of Hyster-Yale, each acting as guarantors (collectively, the "Company"), entered into an agreement with certain financial institutions as lenders, and Bank of America, N.A., as administrative agent, for a $200.0 million term loan (the “Term Loan”) which expires on May 30, 2023 (the "Maturity Date").
The Term Loan requires quarterly principal payments on the last day of each March, June, September and December commencing September 30, 2017 in an amount equal to $2.5 million and the final principal repayment due on the Maturity Date. The Term Loan Borrower may also be required to make mandatory prepayments, in certain circumstances, as provided in the Term Loan.
The obligations under the Term Loan are generally secured by a first priority lien on the present and future shares of capital stock, material real property, fixtures and general intangibles consisting of intellectual property and a second priority lien on working capital assets of the Company, which includes, but is not limited to cash and cash equivalents, accounts receivable and inventory.
Borrowings under the Term Loan bear interest at a floating rate, which can be a base rate or Eurodollar rate, as defined in the Term Loan, plus an applicable margin. The applicable margin is based on the consolidated leverage ratio, as provided in the Term Loan, and ranges from 2.75% to 3.00% for U.S. base rate loans and 3.75% to 4.00% for Eurodollar loans.
In addition, the Term Loan includes restrictive covenants, which, among other things, limit additional borrowings and investments of the Company subject to certain thresholds, as provided in the Term Loan. The Term Loan limits the payment of dividends and other restricted payments Hyster-Yale and its subsidiaries may make to $50.0 million in any fiscal year, unless the consolidated total net leverage ratio, as defined in the Term Loan does not exceed 1.75 to 1.00 at the time of the payment. The Term Loan also contains a provision requiring a premium to be paid in the event of a repricing of the borrowings under the Term Loan, whether by amendment or entry into new loans, within the six month period following entry into the Term Loan.
On May 30, 2017, Hyster-Yale, its wholly owned subsidiaries, Hyster-Yale Group, Hyster-Yale Nederland B.V., Hyster-Yale International B.V., Hyster-Yale Holding B.V., Bolzoni Capital Holding B.V., Hyster-Yale UK Limited and Bolzoni Capital UK Limited (collectively, the “Facility Borrowers”), and certain subsidiaries of Hyster-Yale, as borrowers and guarantors, entered into a first amendment to amended and restated loan, security and guaranty agreement (the "Amendment") with certain financial institutions as lenders, Bank of America, N.A., as administrative agent and security trustee, for its $200.0 million secured floating-rate revolving credit facility (the “Facility”). As a result of the Amendment, among other items, the Term Loan and liens related thereto were permitted, the availability under the Facility was decreased from $240.0 million to $200.0 million and the expiration of the Facility was extended to April 28, 2022. The Facility consists of a U.S. revolving credit facility in the initial amount of $120.0 million and a non-U.S. revolving credit facility in the initial amount of $80.0 million.
The obligations under the Facility are generally secured by a first priority lien on working capital assets of the Facility Borrowers, which include but are not limited to cash and cash equivalents, accounts receivable and inventory and a second priority lien on the present and future shares of capital stock and general intangibles consisting of intellectual property.
Certain of the banks and financial institutions that are parties to the Facility and their respective affiliates have in the past provided, are currently providing and in the future may continue to provide investment banking, commercial banking and other financial services to Hyster-Yale and its subsidiaries in the ordinary course of business for which they have received and will receive customary compensation. In the ordinary course of business, such banks and financial institutions and their respective affiliates may participate in loans and actively trade the equity securities of Hyster-Yale for their own account or for the accounts of customers and, accordingly, such banks and financial institutions and their respective affiliates may at any time hold long or short positions in such securities.