Item 1.01
|
Entry Into a Material Definitive Agreement.
|
Credit Agreement
On the Closing
Date, Ultra Clean entered into a credit agreement (as amended, amended and restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”) by and among Ultra Clean, as parent borrower, Barclays Bank PLC, as administrative
agent and the several lenders from time to time party thereto. The following 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 attached hereto as Exhibit
10.1 and incorporated herein by reference.
The Credit Agreement
provides for a term loan B facility in an initial aggregate principal amount of $350.0 million (the “Term Loan Facility”),
a revolving credit facility in an initial aggregate principal amount of $65.0 million (the “Revolving Credit Facility”),
a letter of credit facility in the initial aggregate available amount of $50.0 million (as a sublimit of such Revolving Credit
Facility) (the “L/C Facility”) and a swing line sub-facility in the aggregate available amount of $10.0 million (as
a sublimit of the Revolving Credit Facility) (together with the Term Loan Facility, the Revolving Credit Facility and the L/C Facility,
the “Senior Secured Credit Facility”). The Revolving Credit Facility is available for the five-year period beginning
on the Closing Date. To the extent not previously paid, all then-outstanding amounts under the Revolving Credit Facility are due
and payable on the maturity date of the Revolving Credit Facility, which is five years from the Closing Date.
On the Closing Date,
Ultra Clean borrowed a total of $350.0 million under the Term Loan Facility which was used to finance the acquisition of the Company
and, along with existing cash, repay the total outstanding amount under the Prior Facility (as defined below), as further described
under Item 1.02 of this Current Report on Form 8-K, which description is incorporated by reference into this Item 1.01.
The Term Loan Facility
must be repaid in equal quarterly installments on the last business day of each calendar quarter, beginning on December 31, 2018.
To the extent not previously paid, all then-outstanding amounts under the Term Loan Facility are due and payable on the maturity
date of the Term Loan Facility, which is seven years from the Closing Date.
The Credit Agreement
includes customary representations, warranties, covenants and events of default.
Interest
At
the option of Ultra Clean, borrowings under the Term Loan Facility and under the Revolving Credit Facility (subject to certain
limitations) bear interest at either a base rate (as determined pursuant to the Credit Agreement) or at the London Interbank Offered
Rate (“LIBOR”) (with the LIBOR being adjusted for certain Eurocurrency reserve requirements, if any, as described in
the Credit Agreement), plus the applicable margin as set forth therein from time to time, in each case based on Ultra Clean’s
consolidated first lien net leverage ratio (as defined in the Credit Agreement) and on Ultra Clean’s corporate credit ratings
and public corporate family rating after giving effect to the Acquisition, the Credit Agreement and the other transactions in connection
therewith. All loans described above made on the Closing Date were initially base rate loans and were converted to LIBOR loans
on August 28, 2018 with an initial interest period of one month.
Guarantors and Collateral
Ultra Clean has
agreed to secure all of its obligations under the Credit Agreement by granting a first priority lien on substantially all of its
assets (subject to certain exceptions and limitations), and each of Ultra Clean Technology Systems and Service, Inc. (“UCTSS”),
American Integration Technologies LLC (“American Integration”), UCT Thermal Solutions, Inc., the Company and Quantum
Global Technologies Holding Company, LLC (together with UCTSS, American Integration, UCT Thermal Solutions, Inc. and the Company,
the “Loan Parties” or “Guarantors”) has agreed to guarantee the obligations of Ultra Clean and any subsidiary
borrowers under the Credit Agreement and to secure the obligations thereunder by granting a first priority lien in substantially
all of such Guarantor’s personal property assets (subject to certain exceptions and limitations), all pursuant to the terms
of the Guarantee and Collateral Agreement, which is filed as Exhibit 10.2 and is incorporated by reference herein.
Covenants
The Credit
Agreement requires Ultra Clean to maintain a consolidated fixed charge coverage ratio (as defined in the Credit Agreement) of at
least 1.25 to 1.00 and a consolidated total gross leverage ratio (as defined in the Credit Agreement) no greater than 3.75 to 1.00,
in each case for any four consecutive fiscal quarter periods.
The Credit Agreement
also includes other covenants, including negative covenants that, subject to certain exceptions, limit Ultra Clean’s and
its restricted subsidiaries’ (as defined in the Credit Agreement) ability to, among other things: (i) incur additional debt,
including guarantees; (ii) create liens upon any of their property; (iii) enter into any merger, consolidation or amalgamation,
liquidate, wind up or dissolve, or dispose of all or substantially all of their property or business; (iv) dispose of assets; (v)
pay subordinated debt; (vi) make certain investments; (vii) enter into swap agreements; (viii) engage in transactions with affiliates;
(ix) engage in new lines of business; (x) modify certain material contractual obligations, organizational documents, accounting
policies or fiscal year; or (xi) create or permit restrictions on the ability of any subsidiary of any Loan Party to pay dividends
or make distributions to Ultra Clean or any of its subsidiaries.
Mandatory Prepayments
The Credit Agreement
also contains customary provisions requiring the following mandatory prepayments (subject to certain exceptions and limitations):
(i) annual prepayments with a percentage of excess cash flow (as defined in the Credit Agreement); (ii) 100% of the net cash proceeds
from any non-ordinary course sale of assets and certain casualty or condemnation events; and (iii) 100% of the net cash proceeds
of indebtedness not permitted to be incurred under the Credit Agreement.
The foregoing description
is qualified in its entirety by reference to the full text of Exhibits 10.1 and 10.2 hereto.
This report shall
not constitute an offer to sell or the solicitation of an offer to buy securities.
Item 1.02
|
Termination of a Material Definitive Agreement.
|
On the Closing Date, using proceeds of the
Term Loan Facility and existing cash, Ultra Clean repaid in full (i) all of its and its subsidiaries indebtedness and other obligations
totaling $41,656,402.91 under that certain Credit Agreement (as amended from time to time through the Closing Date, the “Prior
Credit Agreement”), dated as of February 2, 2015, among Ultra Clean, East West Bank and the other lenders party thereto from
time to time (collectively, the “Prior Credit Agreement Lenders”), together with the loan documents referenced therein,
including the Guarantee and Collateral Agreement in favor of East West Bank dated as of February 2, 2015 (the “Prior Guarantee”)
and (ii) substantially all of the Company’s existing indebtedness for borrowed money and all obligations with respect thereto,
including all of the Company’s and its subsidiaries’ indebtedness and other obligations totaling $9,946,568.85 under
that certain Credit Agreement (the “2011 Credit Agreement”) dated as of April 4, 2011 among the Company, Quantum Global
Technologies Holding Company, LLC, Univest Bank and Trust Co. and the other lenders party thereto from time to time (such lenders,
together with the Prior Credit Agreement Lenders, the “Prior Lenders”) (such 2011 Credit Agreement, together with the
Prior Credit Agreement and the Prior Guarantee, the “Prior Facility”). Concurrently with the repayment, all security
interests and liens held by the Prior Lenders and securing the Prior Facility were terminated and released and the Prior Facility
was terminated.
The Prior Credit Agreement was described
in the Current Report on Form 8-K filed by Ultra Clean on February 6, 2015, and the Prior Credit Agreement and the Prior Guarantee
were filed as Exhibits 10.1 and 10.2 thereto. Such description and Exhibits are incorporated by reference herein.