Item 1.01. Entry into a Material Definitive Agreement.
On January 28, 2013 (the
Closing Date
), Quanex Building Products Corporation, a Delaware corporation
(the
Company
), as borrower, entered into a credit agreement (the
Credit Agreement
) with certain of its subsidiaries as guarantors thereunder, Wells Fargo Bank, National Association (
Wells
Fargo
), as administrative agent, Wells Fargo Securities, LLC, as lead arranger and syndication agent, and the lenders parties thereto. The Credit Agreement is a committed unsecured revolving credit facility that permits aggregate
borrowings of up to, at any one time outstanding, $150,000,000, with a letter of credit sub-facility, a swing line sub-facility and a multicurrency sub-facility. Subject to customary conditions, the Company may request that the aggregate commitments
under the Credit Agreement be increased by up to $100,000,000, with total commitments not to exceed $250,000,000. The maturity date of the facility is January 28, 2018.
The Credit Agreement replaces that certain credit agreement, dated as of April 23, 2008 (the
Original Agreement
), among the Company, as borrower, certain of the Companys
subsidiaries as guarantors, Wells Fargo, in its capacity as administrative agent, and the lenders from time to time parties thereto. The Original Agreement provided the Company with an unsecured revolving credit facility of up to an aggregate
principal amount of $270,000,000. The termination of the Original Agreement and the payment of any and all outstanding amounts due thereunder were conditions precedent to the closing of the Credit Agreement. Effective as of the Closing Date, the
Original Agreement was terminated, with the Company and its subsidiaries having no further obligations thereunder. All letters of credit existing under the Original Agreement continue uninterrupted and are deemed to have been issued under the Credit
Agreement. No early termination penalties were incurred in connection with the termination of the Original Agreement.
Under
the Credit Agreement, U.S. dollar denominated loans accrue interest based on, at the Companys election, either the London Interbank Offered Rate quoted on the applicable Reuters Reference page (
LIBOR rate
) for U.S. dollar
deposits or the base rate (which is derived from the prime rate), in each case, plus an applicable margin. Loans denominated in foreign currencies accrue interest based on the LIBOR rates applicable to such foreign currencies, plus an applicable
margin. Swing line loans may only be made in U.S. dollars and accrue interest at the base rate, plus the applicable margin. Letters of credit, however, may be issued in U.S. dollars or foreign currency, with fees thereon accruing at the applicable
LIBOR rate, plus an applicable margin. The applicable margin used in connection with interest rates and fees is based on the Companys consolidated leverage ratio at the applicable time and the nature of the loan (e.g., U.S. dollar base rate
loan, foreign currency loan, etc.).
The Credit Agreement requires compliance with two financial covenants. The Company must
not permit, on a quarterly basis, the ratio of (a) the Companys and its subsidiaries consolidated net income to (b) the Companys and its subsidiaries consolidated interest expense to be less than 3.00 to 1.00. Also,
the Company must not permit, on a quarterly basis, the ratio of (x) the Companys and its subsidiaries consolidated funded debt to (y) the Companys and its subsidiaries consolidated net income to be greater than 3.25
to 1.00. The Credit Agreement contains representations, warranties, indemnities, affirmative covenants, negative covenants, events of default and remedies provisions customary for credit agreements of its kind. Certain restrictions imposed by the
Credit Agreement include, but are not limited to, restrictions on the ability of the Company and its subsidiaries to incur indebtedness, grant liens, undergo certain fundamental corporate changes, make certain investments, sell certain assets and
engage in certain other activities all as set forth therein. The loan proceeds may only be used to (i) refinance the Companys outstanding obligations the Original Agreement, (ii) pay fees and transaction costs relating to the
Credit Agreement, (iii) fund the Companys and its subsidiaries working capital needs and (iv) finance other general corporate purposes.
The identity of each party to the Credit Agreement is set forth on the signature pages thereto. The foregoing description of the Credit Agreement is qualified in its entirety by reference to the full text
of the Credit Agreement, a copy of which is filed as Exhibit 10.1 and incorporated herein by reference.
2