UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported):
November 7, 2008
MONACO
COACH CORPORATION
(Exact
name of registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction of incorporation)
|
1-14725
(Commission
File Number)
|
35-1880244
(I.R.S.
Employer Identification No.)
|
91320
Industrial Way
Coburg,
Oregon 97408
(Address
of principal executive offices) (Zip code)
(541)
686-8011
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[
] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
Working
Capital Loan Facility:
On
November 7, 2008, Monaco Coach Corporation and its subsidiaries, as borrowers,
entered into a loan and security agreement (the “Working Capital Loan
Agreement”) with certain financial institutions as lenders and Bank of America,
N.A., a national banking association, as agent for the lenders (the “Working
Capital Agent”), providing for a $80.0 million secured revolving loan facility
reducing to $70.0 million on November 7, 2010, with availability to be subject
to an accounts receivable and inventory borrowing base formula. The
Working Capital Loan Agreement provides for sublimits of $15.0 million for
swingline borrowings and $10.0 million for letters of credit. The
proceeds of the revolving loans may be used to repay certain existing
indebtedness, to pay certain fees relating to the transaction and for working
capital and other lawful corporate purposes. On November 7, 2008, the
borrowers drew down $39,016,332.63 under the Working Capital Loan
Agreement.
Borrowings
under the Working Capital Loan Agreement accrue interest at a per annum rate
based on, at the option of the borrowers, either (i) the Working Capital Agent’s
prime rate as in effect from time to time plus 3.50%, but not less than the rate
applicable to LIBOR loans plus 0.25%, or (ii) LIBOR, for an interest period
selected by the borrowers of 30, 60 or 90 days, plus 4.50%. The
borrowers are also obligated to pay unused line fees, letter of credit fees,
closing fees, anniversary fees, agent fees and servicing fees customary for a
revolving loan facility of this size and type. Interest under the Working
Capital Loan Agreement is payable monthly. The revolving loans must
be repaid with substantially all proceeds received by the borrowers that are not
required to be used to repay borrowings under the Term Loan Agreement described
below. The Company may borrow, repay and reborrow funds under the
Working Capital Loan Agreement until November 6, 2011, at which time the Working
Capital Loan Agreement terminates, and all amounts borrowed must be
repaid. In the event the borrowers elect to reduce or terminate
availability under the Working Capital Loan Agreement on or before November 4,
2009, the borrowers would be required to pay an amount equal to 0.50% of the
amount reduced or terminated.
All
obligations under the Working Capital Loan Agreement and related documents are
secured by substantially all of the personal property and real property of the
borrowers. All current and future direct and indirect subsidiaries of
Monaco Coach Corporation are or will become borrowers under the Working Capital
Loan Agreement.
The
Working Capital Loan Agreement contains customary covenants for a revolving loan
facility of this size and type that include, among others, a covenant requiring
the borrowers to enter into contracts fixing or limiting certain interest rate
risks and covenants that limit the borrowers’ ability to incur liabilities,
create liens, make capital expenditures, pay dividends or distributions, make
investments or loans, dispose of assets, make prepayments on certain debt, merge
or consolidate, enter into certain restrictive agreements, enter into hedging
agreements, enter into transactions with affiliates and amend or modify terms of
certain debt. The Working Capital Loan Agreement also contains
financial covenants requiring the borrowers to maintain minimum EBITDA levels
and a minimum fixed charge coverage ratio.
The
Working Capital Loan Agreement contains customary events of default for a
revolving loan facility of this size and type that include, among others,
non-payment defaults, inaccuracy of representations and warranties, covenant
defaults, cross-defaults to certain other material indebtedness, material
judgment defaults, material casualty event defaults, bankruptcy and insolvency
defaults, change of control defaults and material adverse effect
defaults. The occurrence of an event of default could result in an
increase to the applicable interest rate of 2.0%, an acceleration of all
obligations under the Working Capital Loan Agreement, an obligation of all
borrowers to repay the obligations in full, and a right by the Working Capital
Agent to exercise all remedies available to it under the Working Capital Loan
Agreement and related agreements.
Certain
lenders under the Working Capital Loan Agreement are lenders under the
borrowers’ existing credit facility described in Item 1.02 below.
A copy of
the Working Capital Loan Agreement is attached as Exhibit 10.1 to this Current
Report and is incorporated by reference herein.
Term
Loan Facility:
In
addition, on November 7, 2008, Monaco Coach Corporation and certain of its
subsidiaries, as borrowers, and certain other of its subsidiaries, as
guarantors, entered into a financing agreement (the “Term Loan Agreement”) with
certain financial institutions as lenders and Ableco Finance LLC, a Delaware
limited liability company, as collateral agent and administrative agent for the
lenders (the “Term Loan Agent”), providing for a $39.3 million secured term loan
with availability to be subject to a real property and equipment borrowing base
formula. The proceeds of the term loan may be used to repay certain
existing indebtedness, to pay certain fees relating to the transaction and for
general corporate purposes. On November 7, 2008, the borrowers
borrowed the full amount of $39.3 million under the Term Loan
Agreement.
Borrowings
under the Term Loan Agreement accrue interest at a per annum rate based on, at
the option of the borrowers, either (i) a reference rate plus 8.50%, plus an
additional margin of 3.25% that may be paid in kind in lieu of cash at the
borrowers’ option, so long as no default exists under the Term Loan Agreement,
by adding the amount of such payment to the outstanding principal amount of the
term loan, or (ii) LIBOR, for an interest period selected by the borrowers of 1,
2 or 3 months, plus 9.50%, plus an additional margin of 3.25% that may be paid
in kind in lieu of cash at the borrowers’ option, so long as no default exists
under the Term Loan Agreement, by adding the amount of such payment to the
outstanding principal amount of the term loan. The reference rate
will be the greater of (i) the rate of interest publicly announced from time to
time by JPMorgan Chase Bank as its reference rate, base rate or prime rate, and
(ii) 6.25%. LIBOR will be the greater of (i) LIBOR for the applicable
interest period (as adjusted for reserve requirements), and (ii)
4.25%. The borrowers are also obligated to pay closing fees,
anniversary fees, collateral fees, agent fees and servicing fees customary for a
term loan of this size and type.
The term
loan will be repaid in 42 monthly payments of principal in the amount of
$400,000, plus all accrued interest, plus a final payment of all outstanding
amounts on May 6, 2012. The term loan is subject to mandatory
prepayment under certain circumstances, including an annual prepayment based on
the borrowers’ excess cash flow for the prior year, prepayments in connection
with the borrowers’ receipt of proceeds from certain sales of assets,
incurrences of indebtedness, equity issuances, tax refunds, judgments and
casualty events, and prepayments no more frequently than annually in connection
with reductions of the value of the borrowing base. In the event the
borrowers elect to prepay all or part of the term loan prior to the maturity,
and in the event of certain mandatory prepayments, the borrowers will pay an
additional amount equal to 5.0% of the principal amount prepaid if prepaid in
the first year the term loan is outstanding, 3.0% of the principal amount
prepaid if prepaid in the second year the term loan is outstanding and 2.0% of
the principal amount prepaid if prepaid in the third year the term loan is
outstanding.
All
obligations under the Term Loan Agreement and related documents are secured by
substantially all of the personal property and real property of the
borrowers. All current and future direct and indirect subsidiaries of
Monaco Coach Corporation that are not borrowers will guaranty all obligations of
the borrowers under the Term Loan Agreement, and the guaranty obligations will
be secured by substantially all of the personal property and real property of
the guarantors.
The Term
Loan Agreement contains customary covenants for a term loan of this size and
type that include, among others, covenants that limit the borrowers’ ability to
create liens, incur indebtedness, merge or consolidate, dispose of assets, make
loans or investments, enter into lease obligations, incur capital expenditures,
pay dividends or distributions, enter into transactions with affiliates, enter
into certain restrictive agreements, make certain issuances of equity, amend or
modify terms of certain agreements, and enter into sale and leaseback
transactions. The Term Loan Agreement also contains financial
covenants requiring the borrowers to maintain a maximum leverage ratio, a
minimum fixed charge coverage ratio, minimum EBITDA levels and minimum
availability under the Working Capital Loan Agreement.
The Term
Loan Agreement contains customary events of default for a term loan of this size
and type that include, among others, non-payment defaults, inaccuracy of
representations and warranties, covenant defaults, cross-defaults to certain
other material indebtedness, bankruptcy and insolvency defaults, material
judgments defaults, material casualty event defaults, change of control
defaults, including the failure of certain executive officers to be involved in
the business, and material adverse effect defaults. The occurrence of
an event of default could result in an increase to the applicable interest rate
of 3.0%, an acceleration of all obligations under the Term Loan Agreement, an
obligation of all borrowers and guarantors to repay the obligations in full, and
a right by the Term Loan Agent to exercise all remedies available to it under
the Term Loan Agreement and related agreements.
A copy of
the Term Loan Agreement and the Security Agreement dated as of November 6, 2008,
by and among Monaco Coach Corporation and its subsidiaries and Ableco Finance
LLC, as collateral agent are attached as Exhibit 10.2 and Exhibit 10.3,
respectively, to this Current Report and are incorporated by reference
herein.
Warrant:
In
connection with the Term Loan Agreement, Monaco Coach Corporation (the
“Company”) has issued to Ableco Holding LLC (“Holding”) a warrant (the
“Warrant”) to purchase up to 1,000,000 shares of the Company’s common stock,
subject to adjustment, at an exercise price per share equal to $1.7197 (which
represents a 20% premium over the daily volume-weighted average price of the
Company’s common stock for the thirty calendar days up to, and including,
October 29, 2008, as reported on the New York Stock Exchange) at any time or
times until November 7, 2018. The Warrant is subject to antidilution
provisions.
In
connection with the issuance of the Warrant, a Warrantholder Rights Agreement
was entered into, dated as of November 6, 2008 (the “Warrantholder Rights
Agreement”) by and among the Company, Kay Toolson (the Company’s Chairman and
Chief Executive Officer) and Holding. Pursuant to the Warrantholder Rights
Agreement, Holding or subsequent holders of the Warrant (the “warrantholders”),
have the right to appoint one representative as a non-voting observer who is
entitled to attend all meetings of the Company’s board of directors, and any
committees thereof, so long as such warrantholders collectively hold at least 1%
of the Company’s common stock, subject to certain exceptions.
In
connection with the Warrant and the Warrantholder Rights Agreement, the Company
has entered into a Registration Rights Agreement, dated as of November 6, 2008
(the “Registration Rights Agreement”), by and between the Company and Holding.
Pursuant to the Registration Rights Agreement, the Company agreed to file a
registration statement on Form S-3 (the “Registration Statement”) to cover the
initial resale of the shares issuable under the Warrant and granted Holding
certain other related rights. Under the Registration Rights Agreement, the
Company has agreed to file the Registration Statement no later than December 6,
2008.
The
Warrant was issued to Holding without being registered under the Securities Act
of 1933, as amended (the “Securities Act”), in reliance upon exemptions from
registration pursuant to section 4(2) of the Securities Act. Holdco is an
“accredited investor” as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
A copy of
each of the Warrant, the Warrantholder Rights Agreement and the Registration
Rights Agreement is attached as Exhibit 10.4, Exhibit 10.5 and Exhibit 10.6,
respectively, to this Current Report and is incorporated by reference
herein.
Item
1.02 Termination of a Material Definitive Agreement
In
connection with the entry by Monaco Coach Corporation and its subsidiaries into
the Working Capital Loan Agreement and Term Loan Agreement, on November 7, 2008,
Monaco Coach Corporation repaid in full and terminated the commitments under the
Third Amended and Restated Credit Agreement (the “Credit Agreement”), dated as
of November 18, 2005, by and among Monaco Coach Corporation, its subsidiaries
party thereto, the lenders party thereto and U.S. Bank, N.A. as agent for the
lenders. There were no premiums or penalties incurred by the
borrowers in connection with the termination of the Credit
Agreement.
A
description of the material terms of the Credit Agreement can be found under
Item 1.01 in the Form 8-K filed by the Company on November 23, 2005 and such
description is incorporated herein by reference.
Certain
lenders under the Credit Agreement are lenders under the Working Capital Loan
Agreement described above.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant
The
information set forth under Item 1.01, “Entry into a Material Definitive
Agreement,” is incorporated herein by reference.
Item
3.02 Unregistered Sale of Equity Securities
The
information set forth under Item 1.01, “Entry into a Material Definitive
Agreement,” under the subheading “Warrant,” is incorporated herein by
reference.
Item
3.03 Material Modification to Rights of Security Holders
The
Working Capital Loan Agreement and the Term Loan Agreement, as described in item
1.01 above, both contain covenants that prohibit Monaco Coach Corporation from
declaring or paying any dividend or other distribution on its common stock until
the expiration or termination of the Working Capital Loan Agreement and the Term
Loan Agreement or such restrictions are otherwise waived or consented to by the
lenders under the terms of the agreements.
Item
9.01 Financial
Statements and Exhibits.
(d) Exhibits
|
Exhibit Number
|
Description
|
|
10.1
|
Loan
and Security Agreement, dated as of November 6, 2008, by and among Monaco
Coach Corporation and its subsidiaries, certain financial institutions as
lenders and Bank of America, N.A., as agent, lead arranger and book
manager.
|
|
10.2
|
Financing
Agreement, dated as of November 6, 2008, by and among Monaco Coach
Corporation and its subsidiaries, certain lenders party thereto and Ableco
Finance LLC., as collateral agent and administrative
agent.
|
|
10.3
|
Security
Agreement, dated as of November 6, 2008, by and among Monaco Coach
Corporation and its subsidiaries and Ableco Finance LLC, as collateral
agent.
|
|
10.4
|
Warrant,
dated as of November 7, 2008.
|
|
10.5
|
Warrantholder
Rights Agreement, dated as of November 6, 2008, by and among Monaco Coach
Corporation, Kay Toolson and Ableco Holding LLC.
|
|
10.6
|
Registration
Rights Agreement, dated as of November 6, 2008, by and between Monaco
Coach Corporation and Ableco Holding
LLC.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
MONACO
COACH CORPORATION
|
|
|
|
|
|
|
Date:
November 13, 2008
|
/s/
P. Martin Daley
|
|
|
|
P.
Martin Daley
Vice
President and Chief Financial
Officer
|
EXHIBIT
INDEX
|
Exhibit Number
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|