Item 1.01
Entry into a Material Definitive Agreement.
On March 15, 2019, Horizon Global Corporation (the “Company”) entered into a Second Lien Term Loan Credit Agreement (the “Second Lien Term Loan Agreement”) with Cortland Capital Markets Services LLC (“Cortland”), as administrative agent and collateral agent, and the lenders party thereto (the “Second Lien Lenders”). The Second Lien Term Loan Agreement provides for a term loan facility in the aggregate principal amount of $51,020,408, all of which has been borrowed by the Company. Certain of the lenders under the Company’s existing term loan facility provided pursuant to the Term Loan Credit Agreement, dated as of June 30, 2015, as amended (the “Term Loan Agreement”), among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto, are the lenders under the Second Lien Term Loan Agreement. A portion of the proceeds received by the Company under the Second Lien Term Loan Agreement were used to pay in full all outstanding debt incurred under the Credit Agreement, dated as of February 20, 2019 (the “Senior Credit Agreement”), with Cortland, as administrative agent and collateral agent, and the lenders party thereto. On March 14, 2019, the Company had entered into an amendment to the Senior Credit Agreement to extend the maturity until March 15, 2019. As a result of the repayment of all amounts outstanding under the Senior Credit Agreement, it has been terminated and is no longer in effect.
The interest on the term loans under the Second Lien Term Loan Agreement may be paid, at the Company’s election, in cash, at the customary eurocurrency rate plus a margin of 10.50% per annum, or in-kind, at the customary eurocurrency rate plus a margin of 11.50%; provided that if the term loans are converted to base rate loans, the interest rate on interest paid (i) in cash will be the customary base rate plus a margin of 9.50% per annum and (ii) in-kind will be the customary base rate plus a margin of 10.50%; provided, further, however, that cash interest payments are currently prohibited under the Term Loan Agreement and the ABL Credit Agreement (as defined below). There are not amortization payments required under the Second Lien Term Loan Agreement. Borrowings under the Second Lien Term Loan Agreement mature on September 30, 2021. All of the indebtedness under the Second Lien Term Loan Agreement is and will be guaranteed by the Company’s existing and future domestic subsidiaries and certain foreign subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors.
Additionally on March 15, 2019, the Company entered into (i) the Sixth Amendment to Credit Agreement (the “Term Amendment”) with JPMorgan Chase Bank, N.A., as administrative agent, certain of its affiliates and certain other institutions named on the signature pages thereto, to amend the Term Loan Agreement and (ii) the Seventh Amendment to Amended and Restated Loan Agreement and Omnibus Amendment (the “ABL Amendment”) with Bank of America, N.A., as administrative agent, and certain other financial institutions named on the signature pages thereto, to amend the Amended and Restated Loan Agreement, dated as of December 22, 2015 (the “ABL Credit Agreement”), by and among the Company, as borrower, Bank of America, N.A., as administrative agent and the other lenders that are parties thereto. The Term Amendment and the ABL Amendment, among other modifications, permitted the Borrower to enter into the Second Lien Term Loan Agreement and modified certain covenants, including removing the net leverage ratio covenant in the Term Loan Agreement as of December 31, 2018.