Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant
On
April 30, 2019
, L.B. Foster
Company
(“the Company”), its domestic subsidiaries, and certain of its Canadian
and
United Kingdom
subsidiaries
(collectively,
the
“
Borrowers
”
)
,
entered into
the Third
A
mended and
R
estated
Credit Agreement (“Amended Credit Agreement”) with PNC Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens Bank
, N.A.
, and
BMO Harris Bank, N.A
. This Amended Credit Agreement modifies the prior revolving credit facility which had a maximum credit line of $
195
,000,000
, and extends the maturity date from March 1
3, 2020 to April 30, 2024
. The Amended Credit Agreement provides for a five-year,
revolving credit facility that permits
aggregate
borrowings
of the Borrowers
up
to
$
140
,000,000
with
a sublimit of the equivalent of $25,000,000 U.S. dollars that is available to the Canadian
and
United Kingdom
borrowers
in the aggregate
. The Amended Credit Agreement’s
incremental loan
feature permits the Company to increase the available
commitments
under the facility by up to an additional $
5
0,000,000
subject to the Company’s receipt of increased commitments from existing or new lenders
and
the satisfaction of
certain conditions
.
The Company’s and the domestic
, Canadian and United Kingdom
guarantors’
(the "Guarantors"
)
obligations under the
A
mended Credit Agreement
will be secured by the grant of a security interest by the
B
orrowers and
G
uarantors in substantially all of the
assets
owned by such entities. Additionally, the equity interests in each of the
loan parties, other than the Company, and the equity interests held by each
loan party in their
s
ubsidiaries, will be pledged to the lenders as collateral for the lending obligations.
Borrowings under the Amended Credit Agreement will bear interest at rates based upon either the base rate or Euro-rate plus applicable margins. Applicable margins are dictated by the ratio of the Company’s
total net
indebtedness
to the Company’s consolidated
EBITDA
for four trailing
qu
arters
, as defined in the
Amended Credit Agreement. The base rate is the highest of (a)
the Overnight Bank Funding Rate plus 0.50%,
(b) the
Prime Rate
,
or (c) the
D
aily Euro-rate
plus 1.00%
(
each
as defined in the Amended Credit Agreement)
. The base rate and Euro-rate spreads range from 0.
25
% to 1.
25
% and 1.
25
% to 2.
25
%, respectively.
The Amended Credit Agreement includes t
hree
financial covenants: (a)
Maximum Gro
ss
Leverage Ratio, defined as the Company’s
c
onsolidated
Indebtedness
divided by the Company’s consolidated EBITDA
, which must not exceed
(i)
3.25 to 1.00
for
all testing periods other than during an Acquisition Period
,
and (
ii) 3.50 to 1.00 for all testing periods occurring during an Acquisition Period
;
(b) Minimum
Consolidated Fixed Charge
Coverage
Ratio, defined as
the Company's consolida
ted EBITDA divided by the Company's Fixed Charges, which must
be
more
than 1.25 to 1.00
;
and (
c
) Minimum Working Capital to Revolving Facility Usage Ratio, defined as
the sum of the inventory and accounts receivable of the Borrowers and certain other Guarantors divided by Revolving Facility U
sage
,
which must be
more
than
1.40
to 1.00.
The Amended Credit Agreement
permit
s
the Company to pay dividends
and make
distributions and
redemptions with respect to its stock provided no event of default or potential default (as defined in the Amended Credit Agreement) has occurred prior to or after giving effect to the dividend, distribution, or redemption.
Additionally, the Amended Credit Agreement permits the Company to complete acquisitions so long as
(a
)
no event of de
fault or potential de
fault has occurred
prior to or as a result of such acquisition
;
(b)
the
liqui
dity of the Borrowers
is
not
less than $25,000,000
prior to
and after
giving effect to such acquisition;
and
(c)
t
he aggregate consideration
for
the acquisition
does
not exceed
: (i)
$50,000,000 per acquisition
; (ii)
$50,000,000 in the a
ggregate for multiple acquisitions entered into during four conse
cutive quarters
;
and
(iii)
$100,000,000
in the aggregate over the term of the Amended Credit Agreement.
Other restrictions exist at all times including, but not limited to, limitation
s
o
n
the Company’s sale of assets
and the incurrence
by either the
B
orrowers or the non-borrower subsidiaries of the Company
of other indebtedness
, guarantees, and liens.