Item 1.01 Entry into a Material Definitive Agreement
On April 24, 2023, RCM Technologies, Inc. (the "Company") and all of its
subsidiaries (collectively, the "Borrowers") entered into a Fourth Amended and
Restated Loan Agreement (the "Fourth Amended and Restated Loan Agreement") with
Citizens Bank, N.A., as lender (in such capacity, the "Lender") and as
administrative agent and arranger (in such capacity, the "Administrative
Agent"), to amend and restate in its entirety that certain Third Amended and
Restated Agreement dated as of the August 9, 2018 (as the same has been amended
and modified prior to the date hereof, the "Existing Loan Agreement").
Capitalized terms used but not defined herein shall have the respective meanings
given to such terms in the Fourth Amended and Restated Loan Agreement.
Under the Fourth Amended and Restated Loan Agreement, the total commitment
remains at $45.0 million, and permits the Borrowers to request the issuance of
trade and standby letters of credit thereunder. The Fourth Amended and Restated
Loan Agreement has a maturity date of April [24], 2026. Borrowings under the
Fourth Amended and Restated Loan Agreement remain collateralized with
substantially all of the Company's assets, as well as the capital stock of its
subsidiaries.
Borrowings under the Fourth Amended and Restated Loan Agreement bear interest at
one of two alternative rates, as selected by the Company at each incremental
borrowing. These alternatives are: (i) SOFR (the secured overnight financing
rate as published by the Federal Reserve Bank of New York), plus applicable
margin, or (ii) an Alternate Base Rate, which shall mean for any day, a rate per
annum equal to the greatest of (a) the prime rate, as announced by the
Administrative Agent, in effect on such day, (b) the Federal Funds Rate in
effect on such day plus 0.50% per annum and (c) the Daily SOFR Rate on such day
plus 1.00% per annum, provided that the alternate base rate shall at no time be
less than the Floor. The amount of the spread depends on the ratio of
consolidated funded debt to consolidated EBITDA (which, for purposes of the
Fourth Amended and Restated Loan Agreement, is defined as the sum of (i)
consolidated net income (excluding any realized gains or losses from foreign
exchange transactions) before interest, income taxes, depreciation and
amortization, (ii) non-cash charges (including, but not limited to, any
write-offs of goodwill), and (iii) the net loss if any (expressed as a positive
number) arising solely from Permitted Asset or Stock Sales (as defined in the
Fourth Amended and Restated Loan Agreement) up to an amount, which when added to
other net losses previously recognized under clause (iii) does not exceed
$5,000,000.00 in the aggregate, with the Company permitted to add back up to
$1,000,000 in the aggregate of consulting expenses for analyzing tax credits for
research and development costs and 179D energy savings tax credits on a rolling
four quarter basis.
The Fourth Amended and Restated Loan Agreement contains certain affirmative and
negative covenants including limitations on specified levels of consolidated
leverage and consolidated fixed charges, and includes limitations on, among
other things, dividends, liens, mergers, consolidations, sales of assets,
incurrence of debt and capital expenditures. We are also required to pay a
monthly unused facility fee on the amount of the Fourth Amended and Restated
Loan Agreement not drawn which ranges from 10 to 22.5 basis points, depending
upon the ratio of consolidated funded debt to consolidated EBITDA. Upon the
occurrence of an event of default under the Fourth Amended and Restated Loan
Agreement, such as non-payment or failure to observe specific covenants, the
Lender would be entitled to declare all amounts outstanding under the Fourth
Amended and Restated Loan Agreement immediately due and payable.
This description of the Fourth Amended and Restated Loan Agreement is only a
summary and is qualified in its entirety by reference to the full text of the
Fourth Amended and Restated Loan Agreement, which is attached as Exhibit 99.1 to
this Current Report on Form 8-K.
. . .
Item 2.02 Results of Operations and Financial Condition
On April 27, 2023, the Company issued a press release including certain
preliminary financial results for the fiscal quarter ended April 1, 2022. A
copy of the press release is furnished as Exhibit 99.2 to this Current Report on
Form 8-K.
The information set forth under this "Item 2.02. Results of Operations and
Financial Condition" (including the exhibit) shall not be deemed to be "filed"
for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, nor shall it be incorporated by reference in any filing made by the
Company pursuant to the Securities Act of 1933, as amended, other than to the
extent that such filing incorporates by reference any or all of such information
by express reference thereto.
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 in Item 1.01 regarding the Amendment is incorporated
by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On April 25, 2023, Richard A. Genovese, a member of the Company's Board of
Directors (the "Board"), notified the Company of his intention to retire from
the Board effective at the end of his current term in December 2023.
Item 7.01 Regulation FD Disclosure
On April 25, 2023, the Board authorized a program to repurchase shares of its
common stock, $0.05 par value (the "Common Stock"), up to an amount not to
exceed $25.0 million in the aggregate. This newly approved program succeeds the
Company's prior Common Stock repurchase program, which was completed in April
2023. The program is designed to provide the Company with enhanced flexibility
over the long term to optimize its capital structure. Shares of the Common
Stock may be repurchased in the open market or through negotiated transactions.
The program may be terminated or suspended at any time at the discretion of the
Company. The Company may in the future enter into a Rule 10b5-1 trading plan to
effect a portion of the authorized purchases, if criteria set forth in the plan
are met. Such a plan would enable the Company to repurchase its shares during
periods outside of its normal trading windows, when the Company typically would
not be active in the market.
The time of purchases and the exact number of shares to be purchased will depend
on market conditions. The repurchase program does not include specific price
targets or timetables and may be suspended or terminated at any time. The
Company intends to finance the purchases using available working capital and
capacity from the Company's revolving line of credit.
The information set forth under this "Item 7.01. Regulation FD Disclosure" shall
not be deemed to be "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, nor shall it be incorporated by reference in
any filing made by the Company pursuant to the Securities Act of 1933, as
amended, other than to the extent that such filing incorporates by reference any
or all of such information by express reference thereto.
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Item 8.01 Other Events
On April 24, 2023, the Company also entered into an agreement for the repurchase
from two sellers, in a private transaction approved by the Board, of 333,686
shares of the Common Stock at a per share price of $11.91, which was the lowest
sale price of the Common Stock on the Nasdaq Stock Market on such date. Neither
of the sellers in the transaction is an affiliate of the Company or a related
person as defined by Item 404 of Regulation S-K.
Subsequent to December 31, 2022 and through April 28, 2023, including the
333,686 shares purchased in the private transaction described above, the Company
has purchased 1,149,476 shares for an average price of $12.36 per share, which
totals $14.2 million. These share purchases have been funded through the
Company's line of credit.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit Number Exhibit Title
99.1 Fourth Amended and Restated Loan Agreement, dated as of April
24, 2023, by and among the Company and all of its subsidiaries,
Citizens Bank, N.A., as lender and as administrative agent and
arranger.
99.2 Press Release by the Registrant, dated April 28, 2023, furnished
in accordance with Item 2.02 of this Current Report on Form 8-K.
104 Cover Page Interactive Data File (embedded within the Inline
XBRL document).
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