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Item 1.01
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Entry into a Material Definitive Agreement.
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Amendment to Credit Facility
On April 10, 2018, Babcock & Wilcox Enterprises, Inc. (the “
Company
”)
entered into Amendment No. 6 to Credit Agreement (the “
Amendment
”), which amended the Credit Agreement, dated May 11, 2015 (as amended to date, including by the Amendment, the “
Credit Agreement
”), with Bank of America, N.A., as administrative agent and lender, and the other lenders party thereto, to, among other things: (1) modify the definition of EBITDA in the Credit Agreement to exclude up to $51.1 million of additional charges for certain Renewable segment contracts for the quarter ended March 31, 2018 and include in the fiscal quarter ended March 31, 2018 up to $20.0 million of anticipated receipts that will be recorded after March 31, 2018 on account of contractual bonuses and liquidated damages relief, which such receipts shall not then be included in EBITDA for the period actually received; (2) require the Company to pledge the equity interests of certain of its wholly-owned foreign subsidiaries, and to cause certain of the Company’s wholly-owned foreign subsidiaries to guarantee and provide collateral for its obligations under the Credit Agreement; (3) beginning with the quarter ending June 30, 2018, limit the Company to no more than $15.0 million of cumulative net income losses attributable to eight specified Vølund projects; (4) require the Company to reduce commitments under the Credit Agreement with the proceeds of certain debt issuances and asset sales; and (5) remove the Company’s ability to reinvest net cash proceeds from asset sales that trigger prepayment requirements.
The Amendment continued to temporarily waive certain defaults and events of default under the Credit Agreement that occurred on December 31, 2017 and March 31, 2018 as a result of the Company's failure to comply with certain covenants under the Credit Agreement as well as the cross-defaults to the Second Lien Credit Agreement, dated August 9, 2017, with an affiliate of American Industrial Partners (as amended, the "
Second Lien Credit Agreement
"), with certain amendments effective immediately and other amendments effective upon the completion of the Rights Offering (as described herein) and the repayment of the outstanding balance of the Second Lien Credit Agreement. During such waiver period, the Company’s ability to (a) borrow under the Credit Agreement is limited to $220 million in the aggregate and (b) issue letters of credit under the Credit Agreement is limited to $20 million in the aggregate. If the Rights Offering and such repayment do not occur by May 22, 2018, the temporary waiver will end. The temporary waiver will also end if other conditions specified in the Amendment occur. Upon any such termination of the waiver, the Company’s ability to borrow funds and issue letters of credit under the Credit Agreement will terminate.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Equity Commitment Agreement
On April 10, 2018, the Company and Vintage Capital Management, LLC (“
Vintage
”) entered into a new equity commitment agreement (the “
Equity Commitment Agreement
”), which Equity Commitment Agreement amended and restated in its entirety the prior letter agreement, dated as of March 1, 2018, between the Company and Vintage, pursuant to which Vintage agreed to backstop the Company’s Rights Offering for the purpose of providing at least $245 million of new capital. The Equity Commitment Agreement provides for a backstop commitment from Vintage to purchase shares of Company’s common stock, $0.01 par value (“
Common Shares
”), representing any unsold portion of the Rights Offering at a price of $2.00 per Common Share. The offering, issuance, and distribution of the Common Shares in connection with the Equity Commitment Agreement, if any, will be exempt from the registration requirements of section 5 of the Securities Act of 1933 (the “
Securities Act
”) pursuant to Section 4(a)(2) of the Securities Act.
The foregoing description of the Equity Commitment Agreement does not purport to be complete and is qualified in its entirety by reference to the Equity Commitment Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.