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| ICOC > SEC Filings for ICOC > Form 8-K on 25-Mar-2009 | All Recent SEC Filings |
25-Mar-2009
Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or
On March 24, 2009, ICO, Inc. (the "Company") entered into Amendment No. 5 to Credit Agreement ("Amendment No. 5") with KeyBank National Association and Wells Fargo Bank, National Association ("Lenders") amending our Credit Agreement with the Lenders dated as of October 27, 2006, as previously amended by Amendment No. 1 and Waiver to Credit Agreement, dated April 25, 2007; Amendment No. 2 to Credit Agreement, dated June 25, 2007; Amendment No. 3 and Waiver to Credit Agreement, dated October 1, 2007; and Amendment No. 4, dated May 2, 2008 (the "Credit Agreement").
Prior to Amendment No. 5, the Credit Agreement provided a $50,000,000 credit facility ("Credit Facility"), consisting of a $30,000,000 revolving credit facility ("Revolver A"), a $15,000,000 term loan (of which approximately $9,167,000 is currently outstanding) and an additional $5,000,000 term loan (of which approximately $4,167,000 is currently outstanding). The amount of funds available under Revolver A was based on an "asset coverage ratio," which consisted of domestic cash, accounts receivable and inventory. As a result of Amendment No. 5, the amount of funds available to draw under Revolver A is now based on a "borrowing base," which is equal to the sum of 80% of certain domestic "eligible accounts" (accounts receivable) and 50% of certain domestic "eligible inventory" minus any "reserve amount" in effect. In light of Amendment No. 5 and the computation of the funds available under Revolver A, the Company elected to reduce Revolver A of the Credit Facility by $10,000,000 to $20,000,000. The Company does not have any current outstanding borrowings drawn under Revolver A, but does have approximately $1,759,000 in letters of credit currently issued thereunder.
Amendment No. 5 also amends the Credit Agreement by, among other things, (i)
modifying the definition and calculation of "consolidated fixed charges" by
replacing "consolidated income tax expense paid" with a "consolidated income tax
expense" formula and excluding capital distributions made by the Company from
the computation through December 31, 2009; (ii) reducing the "fixed charge
coverage ratio" covenant requirement from a ratio of 1.10 to 1.00 to a ratio of
1.00 to 1.00 through September 30, 2010, increasing thereafter to a ratio of
1.10 to 1.00; (iii) requiring that the Company maintain a fixed coverage ratio
of at least 1.10 to 1.00 during the three consecutive fiscal quarters ending
immediately prior to a "restricted payment," which includes the payment of
dividends by the Company and the repurchase by the Company of its shares; and
(iv) increasing the margin over the applicable base rate on the Company's
borrowings under the Credit Facility. Based on the Company's current leverage
ratio, the margin over the applicable base rate increases from 150 basis points
to 375 basis points on the Company's outstanding $9,167,000 term loan and from
200 basis points to 425 points on the Company's outstanding $4,167,000 term
loan. The increased margins over the base rates are expected to increase the
Company's annual interest expense on its current level of borrowings under the
Credit Agreement in the next twelve month period by approximately $250,000.
The foregoing description of Amendment No. 5 is qualified entirely by reference to the full text of Amendment No. 5, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.
Reference is made to the disclosure set forth under Item 1.01 of this report, which disclosure is incorporated into this Item 2.03 by reference.
(d) Exhibits
10.1 Amendment No. 5 to Credit Agreement, dated March 24, 2009, by and among ICO, Inc., Bayshore Industrial L.P. and ICO Polymers North America, Inc. (as "Borrowers"); KeyBank National Association, Wells Fargo Bank, National Association and the Other Lending Institutions Named Herein (as "Lenders"); and KeyBank National Association (as "an LC Issuer, Lead Arranger, Bookrunner and Administrative Agent"); and Wells Fargo Bank, National Association (as "Swing Line Lender").
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