On September 29, 2021, Huttig Building Products, Inc. (the "Company") and its wholly-owned subsidiary, Huttig, Inc., entered into a Credit Agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto. The Credit Agreement replaces the Company’s existing credit agreement dated as of September 3, 2010 among the Company, Huttig, Inc., the other credit parties signatory thereto, Wells Fargo Capital Finance, LLC, as lender and agent, and the other lenders signatory thereto (as amended, restated, supplemented or otherwise modified, the “Existing Credit Facility”).
The Credit Agreement provides a revolving credit facility of $250 million which may be increased by up to $75 million, subject to certain conditions, including compliance with the financial covenant (the “Facility”). The new Facility will be used to repay amounts due under the Existing Credit Facility, including the payment of fees and expenses associated with such repayment and for working capital and general corporate purposes. Borrowing availability under the Credit Agreement is based on eligible accounts receivable, inventory and real estate and borrowings continue to be secured by substantially all of the assets of the Company and its subsidiary.
Other key terms of the Facility are set forth below.
Term
The maturity date of the Facility is September 29, 2026.
Interest Rate
Under the Credit Agreement, borrowings bear interest at: (i) an adjusted LIBOR rate plus an applicable margin, or (ii) an alternative base rate (ABR) plus an applicable margin. The applicable margins under the Credit Agreement are as follows:
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Average Availability
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LIBOR Margin
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ABR Margin
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>$40,000,000
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1.25%
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(1.40%)
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<$40,000,000 but ≥$20,000,000
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1.50%
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(1.15%)
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<$20,000,000
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1.75%
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(0.90%)
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The interest rate margins are set quarterly based on the average availability for the preceding quarter.
Commitment Fee
Under the Credit Agreement, the Company pays an unused line fee of 0.25% (if the average daily unused amount of the Facility is less than or equal to 50% of the maximum Facility) or 0.20% (if the average daily unused amount of the Facility is greater than 50% of the maximum Facility). Upon closing, the unused line fee was set at 0.25%.
Financial Covenant
Under the Credit Agreement, the Company’s sole financial covenant is a springing minimum fixed charge coverage ratio of 1.0x tested quarterly and is triggered when excess availability falls below $25 million to $15 million (depending on the amount of the borrowing base).
Other Key Provisions
The foregoing description of the material terms of the Credit Agreement is qualified in its entirety by reference to the Credit Agreement, a copy of which is included as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference. Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Credit Agreement.
Other than the Facility itself, there is no material relationship between the Company and JPM, except that the Company leases certain items of equipment from JPM.
A copy of the press release announcing the closing of the Credit Agreement is attached hereto as Exhibit 99.1.