Item 1.01
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
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On February 14, 2020, Tenneco Inc. (the “Company”), Tenneco Automotive Operating Company Inc. and certain other subsidiaries of the Company entered into a First Amendment (the “First Amendment”) and a Second Amendment (the “Second Amendment”) to that certain Credit Agreement, dated October 1, 2018 (the “Credit Agreement”), by and among the Company and Tenneco Automotive Operating Company Inc., as borrowers, J.P. Morgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.
Pursuant to the First Amendment, effective February 14, 2020:
(i) the requirement to maintain a consolidated net leverage ratio as of the end of each fiscal quarter increased to not greater than (a) 4.50 to 1 through March 31, 2021, (b) 4.25 to 1 through September 30, 2021, (c) 4.00 to 1 through March 31, 2022, (d) 3.75 to 1 through September 30, 2022, and (e) 3.5 to 1 thereafter;
(ii) the interest rate on borrowings under the revolving credit facility and the term loan A facility increased from LIBOR plus 1.75% to LIBOR plus 2.00% and will remain at LIBOR plus 2.00% for each relevant period for which Company’s consolidated net leverage ratio (as defined in the Credit Agreement) is equal to or greater than 3.0 to 1. The First Amendment does not change the step-down of the interest rate at lower consolidated net leverage ratios, which steps down to (a) LIBOR plus 1.75% if the Company’s consolidated net leverage ratio is less than 3.0 to 1 and greater than or equal to 2.5 to 1, (b) LIBOR plus 1.50% if the consolidated net leverage ratio is less than 2.5 to 1 and greater than or equal to 1.5 to 1, and (c) LIBOR plus 1.25% if the consolidated net leverage ratio is less than 1.5 to 1; and
(iii) additional restrictions were placed on the Company’s ability to pay dividends and make distributions to its stockholders, to make investments, to repay subordinated indebtedness and to increase the size of the revolving credit facility, the term loan A facility or the term loan B facility.
In addition, pursuant to the Second Amendment, effective February 14, 2020, the Company has greater flexibility to apply, at its discretion, the net cash proceeds of a spin-off of DRiV Inc. to prepay the term loan A facility, the term loan B facility or the senior secured notes (subject to the terms of the senior note indentures).
The foregoing summaries of the First Amendment and the Second Amendment are qualified in their entirety by reference to the full text of such amendments set forth in Exhibits 10.1 and 10.2 to this Current Report on Form 8-K, and which are incorporated by reference into this Item 1.01.