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Item 1.01
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Entry into a Material Definitive Agreement.
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Notes Offering
In connection with the previously announced offering, on December 6, 2021, Warrior Met Coal, Inc., a Delaware corporation (the “Company”), issued $350.0 million in aggregate principal amount of 7.875% senior secured notes due 2028 (the “Notes”). The Notes were issued under that certain indenture dated as of December 6, 2021 (the “Indenture”) by and among the Company, the direct or indirect wholly-owned subsidiaries of the Company party thereto (the “Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”) and priority lien collateral agent, to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States in accordance with Regulation S under the Securities Act. The Notes have not been and will not be registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. As further discussed in Item 1.02 below, the Company used the net proceeds of the offering of the Notes, together with cash on hand, to fund the redemption of all of the Company’s outstanding 8.00% senior secured notes due 2024 (the “Existing Notes”), including payment of the redemption premium in connection with such redemption.
The Notes will accrue interest at a rate of 7.875% per year from December 6, 2021. Interest on the Notes will be payable on June 1 and December 1 of each year, commencing on June 1, 2022. The Notes will mature on December 1, 2028.
At any time prior to December 1, 2024, the Company may redeem the Notes, in whole or in part, at a price equal to 100.00% of the principal amount of the Notes redeemed plus the Applicable Premium (as defined in the Indenture) and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. The Notes are redeemable at the Company’s option, in whole or in part, from time to time, on or after December 1, 2024, at redemption prices specified in the Indenture, plus accrued and unpaid interest, if any, to, but excluding the redemption date. At any time on or prior to December 1, 2024, the Company may redeem up to 40% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings, at a redemption price of 107.875% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to but excluding the redemption date. The Company is also required to make offers to purchase the Notes (i) at a purchase price of 101.00% of the principal amount thereof in the event it experiences specific kinds of change of control triggering events, (ii) at a purchase price of 103.00% of the principal amount thereof prior to making certain restricted payments, and (iii) at a purchase price of 100.00% of the principal amount thereof in the event it makes certain asset sales or dispositions and does not reinvest the net proceeds therefrom or use such net proceeds to repay certain indebtedness, in each case, plus accrued and unpaid interest, if any, to, but excluding the date of purchase.
The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by each of the Company’s direct and indirect wholly-owned domestic restricted subsidiaries that are borrowers or guarantors under the Company’s Second Amended and Restated Credit Agreement (as defined below). The Notes and related guarantees are, subject to exceptions and permitted liens, secured by (i) first-priority security interests in the Notes Priority Collateral (as defined in the Indenture), which includes, among other things, certain material owned real properties, shares of capital stock of the Guarantors, intellectual property, as-extracted collateral (to the extent not constituting inventory) and certain fixed assets of the Company and the Guarantors, which assets also secure the Second Amended and Restated Credit Agreement on a second-priority basis, and (ii) second-priority security interests in the ABL Priority Collateral (as defined in the Indenture), which includes, among other things, certain accounts receivable, inventory and cash of the Company and the Guarantors, which assets also secure the Second Amended and Restated Credit Agreement on a first-priority basis.
The Indenture contains covenants limiting the ability of the Company and any guarantors to, among other things, (i) incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, redeem or repurchase capital stock and prepay subordinated debt; (iii) make investments; (iv) consummate certain asset sales; (v) engage in transactions with affiliates; (vi) grant or assume liens; and (vii) consolidate, merge or transfer all or substantially all of the Company’s assets. These covenants are subject to a number of important exceptions and qualifications.
The Indenture contains customary events of default, including, among other things, (i) failure to make required payments; (ii) failure to comply with certain obligations, covenants or agreements; (iii) failure to pay certain other indebtedness; (iv) occurrence of certain events of bankruptcy and insolvency; (v) failure to pay certain judgments and (vi) certain guarantees of, or liens on the collateral securing, the Notes cease to be in effect or enforceable. An event of default under the Indenture will allow either the Trustee or the holders of at least 30% in aggregate principal amount of the Notes to cause the principal of, premium, if any, and accrued but unpaid interest on all the Notes to accelerate or, in certain cases, will automatically cause the acceleration of the amounts due under Notes.
The foregoing description of the Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the Indenture, a copy of which is attached hereto as Exhibit 4.1 and incorporated herein by reference.