Item 1.01
Entry into a Material Definitive Agreement.
Revolving Credit Facility
On
April 13, 2018
, BlueLinx Holdings Inc., a Delaware corporation (the “
Company
”), entered into an Amended and Restated Credit Agreement, among the Company, certain of the Company’s subsidiaries, as borrowers (together with the Company, the “
Borrowers
”) or guarantors thereunder, Wells Fargo Bank, National Association, in its capacity as administrative agent (“
Wells Fargo
”), and certain other financial institutions party thereto (the “
Revolving Credit Agreement
”). The Revolving Credit Agreement provides for a senior secured revolving loan and letter of credit facility of up to $600 million (the “
Revolving Credit Facility
”) and an uncommitted accordion feature that permits the Borrowers to increase the facility by an aggregate additional principal amount of up to $150 million. If the Borrowers obtain the full amount of the additional increases in commitments, the Revolving Credit Facility will allow borrowings of up to $750 million. Letters of credit in an aggregate amount of up to $30 million are also available under the Revolving Credit Agreement, which would reduce the amount of the revolving loans available under the Revolving Credit Facility. The maturity date of the Revolving Credit Agreement is October 10, 2022. The Revolving Credit Agreement amends and restates the Borrowers’ existing $335 million secured revolving credit facility, dated October 10, 2017, as amended. The proceeds from the Revolving Credit Facility will be used to repay outstanding obligations under the Borrowers’ existing revolving credit facility, to fund a portion of the cash consideration payable in connection with the Merger (as defined below), to fund transaction costs in connection with the Merger and the Revolving Credit Facility, to provide working capital and for other general corporate purposes.
In connection with the execution and delivery of the Revolving Credit Agreement, the Company and certain of the Company’s subsidiaries also entered into a Guaranty and Security Agreement with Wells Fargo (the “
Revolving Guaranty and Security Agreement
”). Pursuant to the Revolving Guaranty and Security Agreement, the Borrowers’ obligations under the Revolving Credit Agreement are secured by a security interest in substantially all of the Company’s and its subsidiaries’ assets (other than real property), including inventories, accounts receivable, and proceeds from those items.
Borrowings under the Revolving Credit Agreement will be subject to availability under the Borrowing Base (as such term is defined in the Revolving Credit Agreement). The Borrowers will be required to repay revolving loans thereunder to the extent that such revolving loans exceed the Borrowing Base then in effect. The Revolving Credit Facility may be prepaid in whole or in part from time to time without penalty or premium, but including all breakage costs incurred by any lender thereunder.
The Revolving Credit Agreement provides for interest on the loans at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75% to 2.25%, with the amount of such margin determined based upon the average of the Borrowers’ excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75% to 1.25%, with the amount of such margin determined based upon the average of the Borrowers’ excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.
In the event excess availability falls below the greater of (i) $50 million and (ii) 10% of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time, the Revolving Credit Agreement requires maintenance of a fixed charge coverage ratio of 1.0 to 1.0 until such time as the Borrowers’ excess availability has been at least the greater of (i) $50 million and (ii) 10% of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time for a period of 30 consecutive days.
The Revolving Credit Agreement also contains representations and warranties and affirmative and negative covenants customary for financings of this type as well as customary events of default.
The foregoing descriptions of the Revolving Credit Agreement and the Revolving Guaranty and Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are filed herewith as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.
Term Loan Credit Facility
On
April 13, 2018
, the Company entered into a Credit and Guaranty Agreement, by and among the Company, as borrower, certain of the Company’s subsidiaries, as guarantors, HPS Investment Partners, LLC, as administrative agent and collateral agent (“
HPS
”), and certain other financial institutions party thereto (the “
Term Loan Agreement
”). The Term Loan Agreement provides for a senior secured term loan facility of $180 million (the “
Term Loan Facility
”). The maturity date of the Term Loan Agreement is
October 13, 2023
. The proceeds from the Term Loan Facility will be used to fund a portion of the cash consideration payable in connection with the Merger and to fund transaction costs in connection with the Merger and the Term Loan Facility.
In connection with the execution and delivery of the Term Loan Agreement, the Company and certain of the Company’s subsidiaries also entered into a Pledge and Security Agreement with HPS (the “
Term Loan Security Agreement
”). Pursuant to the Term Loan Security Agreement and other “Collateral Documents” (as such term is defined in the Term Loan Agreement), the Borrower’s obligations under the Term Loan Agreement are secured by a security interest in substantially all of the Company’s and its subsidiaries’ assets, including inventories, accounts receivable, real property, and proceeds from those items.
The Term Loan Facility may be prepaid in whole or in part from time to time, subject to payment of the “Prepayment Premium” (as such term is defined in the Term Loan Agreement) if such voluntary prepayment does not otherwise constitute an exception to the Prepayment Premium under the Term Loan Agreement and is made prior to the fourth anniversary of the closing date of the Term Loan Agreement, and all breakage costs incurred by any lender thereunder.
The Term Loan Agreement provides for interest on the term loan at a rate per annum equal to (i) LIBOR (subject to a 1.00% floor) plus a margin of 7.00% for loans based on LIBOR, or (ii) the administrative agent’s base rate (subject to a 2.00% floor) plus a margin of 6.00%, for loans based on the base rate.
The Term Loan Agreement requires maintenance of a total net leverage ratio of 8.25 to 1.00 for the fiscal quarter ending September 29, 2018, and such required covenant level reduces over the term of the Term Loan Facility as set forth in the Term Loan Agreement.
The Term Loan Agreement also contains representations and warranties and affirmative and negative covenants customary for financing transactions of this type, as well as customary events of default.
The foregoing descriptions of the Term Loan Agreement and the Term Loan Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are filed herewith as Exhibits 10.3 and 10.4, respectively, and incorporated herein by reference.