| ITEM 1.01 |
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
|
On August 4, 2020 (the “Closing Date”), Navistar International
Corporation, a Delaware corporation (the “Company”), completed a
certain tax-exempt bond
financing in which the Illinois Finance Authority (the “IFA”)
issued and sold $225,000,000 aggregate principal amount of Recovery
Zone Facility Revenue Refunding Bonds (Navistar International
Corporation Project) Series 2020 due October 15, 2040 (the
“Bonds”). The Bonds were issued pursuant to an Indenture dated as
of July 1, 2020 (the “Indenture”), between the IFA and
Citibank, N.A., as Trustee (the “Trustee”). The proceeds of the
Bonds were loaned by the IFA to the Company pursuant to a Loan
Agreement dated as of July 1, 2020 (the “Loan Agreement”). The
obligations of the Company under the Loan Agreement are evidenced
by a Promissory Note (the “Note”) executed by the Company in favor
of the IFA. The IFA has assigned the Note and certain of its rights
under the Loan Agreement to the Trustee as security for the payment
of the principal or purchase price of, premium, if any, and
interest on, the Bonds. The Loan Agreement and the Note are senior
unsecured obligations of the Company. The payment of principal or
purchase price of, premium, if any, and interest on, the Bonds is
guaranteed by a Bond Guarantee dated as of July 1, 2020 (the
“Guarantee”) from Navistar, Inc., the wholly-owned and principal
manufacturing subsidiary of the Company (the “Guarantor”), to the
Trustee.
The Bonds were offered for sale by BofA Securities, Inc. (the
“Underwriter”).
The Bonds are special, limited obligations of the IFA, payable out
of the revenues and income derived under the Loan Agreement and the
Guarantee. The proceeds from the issuance of the Bonds will be
used, together with certain other funds of the Company, for the
purposes of refunding (1) the $135,000,000 aggregate principal
amount of IFA Recovery Zone Facility Revenue Bonds (Navistar
International Corporation Project), Series 2010 due
October 15, 2040 (the “ IFA 2010 Bonds”) and (2) $90,000,000
aggregate principal amount of The County of Cook, Illinois Recovery
Zone Facility Revenue Bonds (Navistar International Corporation
Project), Series 2010 due October 15, 2040 (the “Cook County
Bonds”; together with the IFA Bonds , the “2010 Bonds”). Proceeds
of the 2010 Bonds were used to (1) finance a portion of the
cost of acquiring, constructing and equipping certain facilities
(the “Projects”) either leased, or then owned or to be owned by the
Company or one of its affiliates, including the consolidation of
various operations into one central location, the expansion of a
then existing warehouse facility and the development of certain
industrial facilities, together with related facilities,
improvements and equipment or (2) pay a portion of the
interest accruing on the Bonds during construction of the
Projects.
The Company’s payment obligations under the Loan Agreement
correspond to the payment of principal and interest when and as due
on the Bonds. The Bonds bear interest at the fixed rate of 4.75%
per annum for an initial term interest rate period from
August 4, 2020 through July 31, 2030 (the “Initial Term
Interest Rate Period”), payable each April 15 and
October 15, commencing April 15, 2021. Beginning on
August 1, 2030, the Bonds are subject to optional redemption
at the direction of the Company, in whole or in part. In addition,
if the Company is acquired by TRATON SE or one of its affiliates,
the Company may, at its option, redeem all, but not less than all,
of the Bonds. In each case, the Company will pay a redemption price
equal to 100% of the principal amount thereof, plus accrued
interest, if any, to the redemption date. The Bonds will be subject
to mandatory tender for purchase on the business day following the
last day of the Initial Term Interest Rate Period. Payment of the
purchase price of the Bonds will be made from proceeds of
remarketing the Bonds, by the Company pursuant to the Loan
Agreement and the Note or by the Guarantor pursuant to the
Guarantee. As provided in the Indenture, the interest rate on the
Bonds may be converted and reconverted from one Interest Rate
Period (as defined in the Indenture) to another Interest Rate
Period. Upon a change in the Interest Rate Period, the Bonds will
be subject to mandatory tender for purchase.
The Loan Agreement, among other things, (1) limits, in certain
circumstances, the ability of the Company to engage in mergers or
consolidations or transfer all or substantially all of its assets
and (2) provides for customary events of default which include
(subject in certain cases to customary grace and cure periods),
among others, nonpayment of principal or interest; breach of other
agreements in the Loan Agreement; and defaults in, or failure to
pay, certain other indebtedness. Generally, if an event of default
occurs and is not cured within the time periods specified, the
Trustee may, or upon the request of the holders of not less than
66-2/3% in aggregate
principal amount of the then outstanding Bonds, shall declare all
of such Bonds to be due and payable immediately.
Copies of the Loan Agreement, the Note and the Guarantee are
attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and
are incorporated herein by reference. A copy of the Indenture is
also being filed herewith solely because certain terms used in the
Loan Agreement are defined in the Indenture and therefore the Loan
Agreement and Indenture are integrally related.
