Item 1.01 Entry into a Material Definitive Agreement.
On July 14, 2017, Huttig Building Products, Inc. and its wholly owned subsidiary, Huttig,
Inc. (collectively, the “
Company
”), entered into a Sixth Amendment to Amended and Restated Credit Agreement
(the “
Sixth Amendment
”) with Wells Fargo Capital Finance, LLC (“
Wells Fargo”)
as agent and
a lender, Bank of America, N.A. (“Bank of America”), as a lender and JPMorgan Chase Bank, N.A. (“JPMorgan”),
as a lender.
The Sixth Amendment revises certain provisions of the Company’s existing revolving
credit facility (the “
Facility
”), including, but not limited to, those changes as set forth below.
Facility Size
The Sixth Amendment increased the aggregate commitment of all Lenders from $160 million
to $250 million. The amended facility may be increased to $300 million, through an uncommitted $50 million accordion feature, subject
to terms and conditions.
Term
The Sixth Amendment extends the maturity date of the Facility from May 27, 2019 to July
14, 2022.
Interest Rate
Under the Facility, borrowings bear interest at: (i) the LIBOR rate plus an applicable
margin, or (ii) the Index Rate plus an applicable margin. Under the Sixth Amendment, starting July 14, 2017 the margins, based
on average borrowing availability, changed to LIBOR plus 1.25% - 1.75% from LIBOR plus 1.50% - 2.25%. Index rate margins were also
reduced.
The unused line fee margin remains at 0.25%.
Fixed Charge Coverage Ratio
The sole financial covenant in the Facility – the minimum fixed charge coverage
ratio – was revised from 1.05:1.00 to 1.00:1.00. On any day that borrowing availability is less than the minimum availability
amount, the Company must have on a consolidated basis at the end of each fiscal quarter, a fixed charge coverage ratio for the
12-month period then ended of not less than 1.00:1.00. The definition of “minimum availability amount” was also revised
under the Sixth Amendment to mean an amount equal to the greater of (a) $17,500,000 (previously $12,500,000), and (b) 12.5% of
the Borrowing Base (but not to exceed 12.5% of the Maximum Amount) as of that date.
Selected Other Amendments
The Sixth Amendment provides the Company with additional flexibility with respect to
permitted acquisitions, purchase money indebtedness, capital lease obligations, share repurchases and dividends.
The foregoing description of the material terms of the Sixth Amendment is qualified in
its entirety by reference to the Sixth Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K,
and is incorporated herein by reference.
Other than the Facility itself, there is no material relationship between the Company
and Wells Fargo, Bank of America and JPMorgan, except that the Company leases certain items of equipment from Wells Fargo and houses
certain customary treasury bank functions with Wells Fargo.
A copy of the press release announcing the closing of the Sixth Amendment is filed as
Exhibit 99.1 to this Form 8-K.