ITEM 1.01
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
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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.