Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On June 29, 2016, L. B. Foster Company (the "Company"), its domestic
subsidiaries, and certain of its Canadian subsidiaries entered into the First
Amendment (the "First Amendment") to the Second Amended and Restated Credit
Agreement dated March 13, 2015 (the "Amended and Restated Credit Agreement"),
with PNC Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens
Bank of Pennsylvania, and Branch Banking and Trust Company. This First Amendment
modifies the Amended and Restated Credit Agreement which had a maximum credit
line of $335,000,000. The First Amendment reduces the permitted borrowings to
The Company's and the domestic guarantors' obligations under the First Amendment
will be secured by the grant of a security interest by the domestic borrowers
and domestic guarantors in substantially all of the personal property owned by
such entities. Additionally, the equity interests in each of the domestic loan
parties, other than the Company, and the equity interests held by each domestic
loan party in their domestic subsidiaries, will be pledged to the lenders as
collateral for the lending obligations.
The First Amendment provides that liens on the collateral will be released upon
satisfaction of certain conditions, including the submission by the loan parties
of a compliance certificate for two consecutive fiscal quarters, calculated for
the four consecutive fiscal quarters then ending, each evidencing a Leverage
Ratio (defined as the Company's indebtedness less cash on hand in excess of
$15,000,000, divided by the Company's consolidated EBITDA) of less than or equal
to 2.75 to 1.00; provided that the last day of such two consecutive fiscal
quarters cannot be earlier than June 30, 2018.
Certain financial covenants in the Credit Agreement are also amended. The First
Amendment revises the maximum Leverage Ratio, which must not exceed the amounts
set forth below for applicable fiscal quarters: June 30, 2016 and September 30,
2016, 4.75 to 1.00; December 31, 2016, 4.5 to 1.00; March 31, 2017, 4.25 to
1.00; June 30, 2017, 4.00 to 1.00; September 30, 2017, 3.75 to 1.00;
December 31, 2017, 3.5 to 1.00; and March 31 and all fiscal quarters ending
thereafter, 3.25 to 1.00.
Borrowings under the First Amendment will bear interest at rates based upon
either the base rate or Euro-rate plus applicable margins. Applicable margins
are dictated by the ratio of the Company's indebtedness less consolidated cash
on hand to its consolidated EBITDA, as defined in the underlying Amended and
Restated Credit Agreement. The base rate is the highest of (a) PNC Bank's prime
rate, (b) the Federal Funds Rate plus 0.50% or (c) the daily Euro-rate (as
defined in the Amended and Restated Credit Agreement) plus 1.00%. The base rate
and Euro-rate spreads range from 0.025% to 2.25% and 1.25% to 3.25%
Loans and advances to non-loan parties and loans, advances, and investments by
domestic loan parties to subsidiaries which are not loan parties and to foreign
loan parties is not permitted to exceed $10,000,000 in the aggregate at any one
time, provided that, on March 31, 2018, when the maximum Leverage Ratio
requirement is 3.25 to 1.00, this limit will increase to $75,000,000.
The First Amendment permits the Company to pay dividends, distributions and make
redemptions with respect to its stock provided no event of default or potential
default (as defined in the Amended and Restated Credit Agreement) has occurred
prior to or after giving effect to the dividend, distribution, or redemption.
Dividends, distributions, and redemptions are capped at $4,000,000 per year when
funds are drawn on the facility until March 31, 2018, when the maximum Leverage
Ratio requirement is 3.25 to 1.00, at which time this limit will increase to
$25,000,000. If no drawings on the facility exist, dividends, distributions, and
redemptions in excess of $4,000,000 (or $25,000,000, as appropriate) per year
are subjected to a limitation of $75,000,000 in the aggregate. The $75,000,000
aggregate limitation also permits certain loans, investments, and acquisitions.
The First Amendment provides that each of the loan parties and their
subsidiaries shall not enter in into any merger, consolidation, or other
reorganization, or acquire all or substantially all of the assets, division,
business, stock, or other ownership interests or permit any consolidation or
merger with an aggregate consideration in excess of $12,000,000 until after
March 31, 2018.
Item 7.01 Regulation FD Disclosure.
On July 1, 2016, the Company issued a press release announcing the transaction
described in Items 1.01 and 2.03 of this Current Report on Form 8-K. A copy of
the press release is attached hereto as Exhibit 99.1. The information in this
Item 7.01, including exhibit 99.1, is furnished and shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise
subject to liabilities under that section, and shall not be deemed to be
incorporated by reference into the filings of L.B. Foster under the Securities
Act of 1933, as amended, regardless of any general incorporation language in
Item 9.01 Financial Statements and Exhibits.
99.1 Press Release dated July 1, 2016.
10.1 First Amendment dated June 29, 2016 to Amended and Restated Credit
Agreement dated March 13, 2015, between Registrant and PNC Bank N.A., Bank
of America, N.A., Wells Fargo Bank, N.A., Citizens Bank of Pennsylvania,
and Branch Banking and Trust Company including forms of Security Agreement
and Pledge Agreement.
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