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Item 1.01
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Entry Into a Material Definitive Agreement.
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On October 30, 2017, Forum Energy Technologies, Inc.
(the “Company”) and Forum Canada ULC (“Forum Canada”) entered into a Third Amended and Restated Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and several financial institutions as lenders,
joint lead arrangers and joint book runners (the “Credit Agreement”), which amends and restates in its entirety the Company’s existing revolving credit facility. The Credit Agreement includes a senior-secured asset-based revolving
lending facility with commitments in the aggregate amount of $300 million (the “Credit Facility”) (with a sublimit of up to $25 million available for the issuance of letters of credit for the account of the Company and certain of
its domestic subsidiaries) (the “US Line”), of which up to $30.0 million is available to certain Canadian subsidiaries of the Company for loans in United States or Canadian dollars (with a sublimit of up to $3 million available
for the issuance of letters of credit for the account of Canadian subsidiaries of the Company) (the “Canadian Line”). The Credit Agreement provides for an ability to increase commitments by an additional $100.0 million, subject to
certain conditions. The Credit Facility matures in July 2021, but if the Company’s outstanding Notes due October 2021 are refinanced or replaced with indebtedness maturing on or after January 31, 2023, the final maturity of the Credit
Facility will automatically extend to October 2022. Availability under the Credit Facility is subject to a borrowing base calculated by reference to eligible accounts receivable in the United States, Canada and certain other jurisdictions (subject
to a cap) and eligible inventory in the United States and Canada.
Borrowings under the US Line bear interest at a rate equal to, at the Company’s
option, either (a) the LIBOR rate or (b) a base rate determined by reference to the highest of (i) the rate of interest per annum determined from time to time by Wells Fargo as its prime rate in effect at its principal office in San
Francisco, (ii) the federal funds rate plus 0.50% per annum and (iii) the
one-month
adjusted LIBOR plus 1.00% per annum, in each case plus an applicable margin. Borrowings under the Canadian Line
bear interest at a rate equal to, at Forum Canada’s option, either (a) the CDOR rate or (b) a base rate determined by reference to the highest of (i) the prime rate for Canadian dollar commercial loans made in Canada as reported
from time to time by Thomson Reuters and (ii) the CDOR rate plus 1.00%, in each case plus an applicable margin. The applicable margin for LIBOR and CDOR loans will initially range from 1.75% to 2.25%, depending upon average excess availability
under the Credit Facility. After the first quarter ending on or after March 31, 2018 with respect to which the Company’s total leverage ratio is less than or equal to 4.00:1.00, the applicable margin for LIBOR and CDOR loans will range
from 1.50% to 2.00%, depending upon average excess availability under the Credit Facility.
Subject to customary exceptions, all obligations under the
Credit Facility are guaranteed, jointly and severally, by each wholly-owned US subsidiary of the Company and, in the case of the Canadian Line, each wholly-owned Canadian subsidiary of the Company, and are secured by substantially all assets of each
such entity and the Company.
The Credit Facility contains certain customary affirmative covenants. The negative covenants in the Credit Facility include,
among others, limitations (none of which are absolute) on each loan party’s ability to: incur additional debt or issue certain preferred shares, create liens on certain assets, make certain loans or investments (including acquisitions), pay
dividends, make distributions or make other restricted payments, consolidate, merge, or dispose of assets, enter into certain transactions with affiliates, and modify the terms of certain debt or organizational agreements.
If excess availability under the Credit Facility falls below the greater of 10.0% of the line cap and $20.0 million, the Company will be required to
maintain a fixed charge coverage ratio of at least 1.00:1.00 as of the end of each fiscal quarter until excess availability under the Credit Facility exceeds such thresholds for at least 60 consecutive days.
The Credit Agreement contains certain customary events of default, including relating to a change of control. If an event of default occurs, the lenders under
the Credit Facility will be entitled to take various actions, including the acceleration of amounts due under the Credit Facility and all actions permitted to be taken by a secured creditor in respect of the collateral securing the Credit Facility.
The foregoing description of the Credit Agreement is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as
Exhibit 10.1 hereto.