Item 1.01
Entry into a Material Definitive Agreement
Seaboard Corporation (“Seaboard”) and Seaboard’s wholly-owned subsidiary, Seaboard Foods LLC (“Seaboard Foods”), entered into an Amended and Restated Term Loan Credit Agreement dated September 25, 2018 (“Credit Agreement”) among Seaboard; Seaboard Foods; CoBank, ACB; Farm Credit Services of America, PCA; and the Lenders Party thereto which Credit Agreement amends and restates the Term Loan Credit Agreement dated December 4, 2015 and replaces Seaboard Foods’ existing $500,000,000 unsecured term loan with a $700,000,000 unsecured term loan (“Term Loan”). Seaboard has guaranteed all obligations of Seaboard Foods under the Term Loan.
The Term Loan is for a term of ten years and provides for quarterly amortization of the principal balance in the aggregate annual amount of 1.0% in each year, with the balance due on the maturity date, which is September 25, 2028. The Term Loan bears interest at fluctuating rates based on various margins over a Base Rate LIBOR, or a Quoted Rate, at the option of Seaboard Foods, which margin and reference rate presently equals 162.5 basis points over LIBOR.
The Credit Agreement contains customary covenants for credit facilities of this type, including restrictions on the ability of Seaboard, Seaboard Foods and Seaboard’s other subsidiaries to: (i) grant liens on assets; (ii) incur indebtedness; and (iii) make certain acquisitions, investments and asset dispositions in excess of specified amounts. The Credit Agreement also includes restrictions in the ability of Seaboard and Seaboard Foods to: (i) make certain restricted payments and dividends and distributions to shareholders in excess of specified amounts; and (ii) enter into agreements that limit their ability to make dividends or distributions or transfer property to Seaboard, guarantee the indebtedness of Seaboard or grant liens on their assets. The Credit Agreement also restricts the ability of Seaboard to issue equity interest and contains financial covenants applicable to Seaboard involving (i) a maximum debt to capitalization ratio; and (ii) a minimum tangible net worth. The Credit Agreement requires mandatory prepayments for certain equity issuances by Seaboard and asset dispositions, debt incurrences and casualty events by Seaboard, Seaboard Foods and Seaboard’s other subsidiaries in excess of specified amounts.
The Credit Agreement provides for certain customary events of default, including among others, non-payment of principal, interest or other amounts when due, inaccuracy of representations and warranties, violation of covenants, cross defaults, judgments, unissued casualty events, and certain ERISA events in excess of a specified amount, insolvency or inability to pay debts, bankruptcy or a change of control.
The foregoing description of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the Credit Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.