Item 1.01. Entry into a Material Definitive Agreement
As previously disclosed, Fathom Digital Manufacturing Corporation's (the
"Company") Credit Agreement, dated as of December 23, 2021, among Fathom
Guarantor, LLC, Fathom Manufacturing, LLC, the lenders from time to time party
thereto and JPMorgan Chase Bank, N.A., as administrative agent, was amended as
of November 10, 2022 (the original Credit Agreement, as so amended, the "Amended
Credit Agreement"). On March 24, 2023, the parties to the Amended Credit
Agreement entered a further amendment to the Amended Credit Agreement (the
"Second Amendment"; the Amended Credit Agreement as so amended, the "Second
Amended Credit Agreement") in order to modify certain financial covenants
contained therein.
Specifically, the Second Amendment (i) suspends through fiscal 2023
applicability of the minimum interest coverage ratio of 2.50 to 1.0 for each
fiscal quarter ending in fiscal 2023, and reduces the minimum interest coverage
ratio from 2.75 to 1.0 for the fiscal quarters ending on March 31, 2024 and June
30, 2024 and 3.0 to 1.0 for the fiscal quarters ending on September 30, 2024 and
December 31, 2024 to 2.00 to 1.0 for the fiscal quarters ending on March 31,
2024 and June 30, 2024, 2.25 to 1.0 for the fiscal quarter ending on September
30, 2024 and 2.50 to 1.0 for the fiscal quarter ending on December 31, 2024,
(ii) suspends through fiscal year 2023 applicability of the maximum net leverage
ratio of 4.50 to 1.0 for the fiscal quarters ending on March 31, 2023 and June
30, 2023 and 4.25 to 1.0 for the fiscal quarters ending on September 30, 2023
and December 31, 2023, and increases the maximum net leverage ratio from 4.0 to
1.0 for the fiscal quarter ending on March 31, 2024 and 3.5 to 1.0 for the
fiscal quarters ending on June 30, 2024, September 30, 2024 and December 31,
2024, to 5.0 to 1.0 for the fiscal quarter ending on March 31, 2024, 4.75 to 1.0
for the fiscal quarter ending on June 30, 2024, 4.50 to 1.0 for the fiscal
quarter ending on September 30, 2024 and 4.0 to 1.0 for the fiscal quarter
ending December 31, 2024, (iii) establishes a new quarterly minimum EBITDA
financial covenant of $3.1 million for the fiscal quarter ending March 31, 2023,
$8.75 million for the trailing two fiscal quarter period ending June 30, 2023,
$16.75 million for the trailing three fiscal quarter period ending September 30,
2023 and $24.4 million for the trailing four fiscal quarter period ending
December 31, 2023 (excluding for purposes of this covenant specified adjustments
otherwise made pursuant to the definition of EBITDA in the Second Amended Credit
Agreement), (iv) establishes a new financial covenant of minimum Liquidity (as
defined in the Second Amended Credit Agreement) of at least $13.5 million on the
last day of any month ending on March 31, 2023 and through and including
December 31, 2024, (v) suspends through December 31, 2024 certain sale and
lease-back transactions, acquisitions, other investments and restricted payments
by the Company otherwise permitted by Article VI of the Second Amended Credit
Agreement and (vi) imposes certain other limitations on the incurrence of
subordinated indebtedness prior to March 31, 2024. Additionally, the Second
Amendment provides for a new interest rate spread of adjusted Term SOFR plus
4.00% or alternate base rate + 3.00% (as may be selected by the Company), at any
time the Company's net leverage ratio is equal to or in excess of 4.50 to 1.00.
Under the Amended Credit Agreement the Company is subject to various financial
covenants, including quarterly net leverage and interest coverage. For the
period ending December 31, 2022, the Company was in compliance with the net
interest coverage covenant. We did not meet the quarterly net leverage ratio for
the period ending December 31, 2022, however, the lenders provided the Company
with a loan covenant waiver as of and for the three months ended December 31,
2022.
In connection with the preparation and execution of the Second Amendment, the
Company paid customary arranger and lender consent fees, and reasonable and
documented expenses of the Administrative Agent.
The foregoing description is only a summary of certain provisions of the Second
Amended Credit Agreement and is qualified in its entirety by reference to the
Second Amendment (including the form of restated Second Amended Credit Agreement
attached as Annex I thereto), a copy of which is attached to this Current Report
as Exhibit 10.1 and incorporated herein by reference.
Item 9.01.. Financial Statement and Exhibits
(d) Exhibits.
Exhibit
Number Description
10.1 Second Amendment dated as of March 24, 2023 to Credit Agreement,
dated as of December 23, 2021, amount Fathom Guarantor, LLC, Fathom
Manufacturing, LLC, the Lenders from time to time party hereto and
JPMorgan Chase Bank, N.A., as Administrative Agent.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
Forward-looking Statements
This Current Report contains certain forward-looking statements within the
meaning of the within the meaning of the Private Securities Litigation Reform
Act of 1995. All statements contained in this Current Report that do not relate
to matters of historical fact should be considered forward-looking statements,
including the timing of completion of, the costs incurred, and the future
charges related to, the Reorganization, and the impact of the Reorganization on
the Company's business, finances, and operations.
Forward-looking statements generally are identified by the words such as
"believe," "project," "expect," "anticipate," "estimate," "intend," "strategy,"
"future," "opportunity," "plan," "may," "should," "will," "would," "will be,"
"will continue," "will likely result," and similar expressions. Forward-looking
statements are predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a result, are
subject to risks and uncertainties. Many factors could cause actual future
events to differ materially from the forward-looking statements in this Current
Report, including but not limited to, the risks and uncertainties set forth
under the heading "Risk Factors" in the Company's Annual Report on Form 10-K
filed on April 8, 2022 and the Company's other filings with the U.S. Securities
and Exchange Commission. These filings identify and address other important
risks and uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made. Readers are
cautioned not to put undue reliance on forward-looking statements, and the
Company assumes no obligation and does not intend to update or revise these
forward-looking statements, whether as a result of new information, future
events, or otherwise.
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