Item 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION
On November 7, 2017, Albany International Corp. (the “Registrant”
or the “Company”) entered into a $685 million, unsecured Five-Year Revolving Credit Facility Agreement (the "New
Agreement") with JPMorgan Chase Bank, N.A., as Administrative Agent (the “Agent”) and other lenders. JPMorgan
Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, and The Bank of Tokyo-Mitsubishi
UFJ, Ltd. acted as Co-Lead Arrangers and Joint Bookrunners for the syndication of the New Agreement. The Bank of America, N.A.,
Wells Fargo Bank, National Association and The Bank of Tokyo-Mitsubishi UFJ, Ltd acted as Co-Syndication Agents. The other lenders
participating in the New Agreement are The Branch Banking and Trust Company, Citizens Bank, N.A., and TD Bank, N.A. (who, collectively,
also acted as Co-Documentation Agents) as well as Nordea Bank AB and KeyBank. The New Agreement amends and restates a $550 million
five-year facility agreement dated April 8, 2016 (the “Original Agreement”), with the same Agent and
Lenders.
The New Agreement contains customary terms, as well as affirmative
covenants, negative covenants and events of default that are substantially comparable to those in the Original Agreement. The Borrowings
are guaranteed by certain of the Registrant's subsidiaries, including all significant U.S. subsidiaries (subject to certain exceptions),
as were borrowings under the Original Agreement.
The applicable interest rate for borrowings under the New Agreement,
as well as under the Original Agreement, is LIBOR plus a spread, based on the Registrant’s leverage ratio at the time of
borrowing. Spreads under the New Agreement are the same as those under the Original Agreement. The applicable interest rate for
borrowings on November 7 was LIBOR plus 150.0 basis points (or 2.74% for a one-month borrowing).
On May 6, 2016, we terminated our interest rate swap agreements
that had effectively fixed the interest rate on up to $120 million of revolving credit borrowings, in order to enter into a new
interest rate swap with a greater notional amount, and the same maturity as the Original Agreement. We paid $5.2 million to terminate
the swap agreements and that cost will be amortized into interest expense through June 2020.
On May 9, 2016, we entered into interest rate hedging transactions
for the period May 16, 2016 through March 16, 2021. These transactions have the effect of fixing the LIBOR portion of the effective
interest rate (before addition of the spread) on $300 million of indebtedness, whether drawn under either the Original Agreement
or the New Agreement, at the rate of 1.245% during the period. Under the terms of these transactions, we pay the fixed rate of
1.245% and the counterparties pay a floating rate based on the one-month LIBOR rate at each monthly calculation date, which on
November 7, 2017 was 1.24%, during the swap period. On November 7, 2017, the all-in-rate on the $300 million of debt was 2.745%.
The Agent and certain of the Lenders or their affiliates have from
time to time performed, and may in the future perform, various investment banking, financial advisory and other lending services
for the Company and its affiliates, for which they have received and will receive customary fees.
A copy of the Agreement is being filed as an exhibit. A copy of
the Original Agreement was previously filed as an exhibit to the Company's Current Report on Form 8-K filed April 8, 2016.