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| IO > SEC Filings for IO > Form 8-K on 2-Jun-2009 | All Recent SEC Filings |
2-Jun-2009
Entry into a Material Definitive Agreement, Creation of a Direct Financial O
• Purchase Agreements for the offering and sale of 18,500,000 shares of its common stock in privately-negotiated transactions to seven "accredited investors" (as defined in Rule 501 under the Securities Act of 1933, as amended).
The Company will use the net proceeds from the private placement, along with
approximately $3.0 million of its cash on hand, to promptly repay in full the
indebtedness outstanding under the Company's Bridge Loan Agreement dated as of
December 30, 2008 with Jefferies Finance LLC ("Jefferies"), as administrative
agent, sole bookrunner and sole lead arranger.
Fifth Amendment to Credit Agreement. The Company's Amended Credit Facility is
governed by the terms of that certain Amended and Restated Credit Agreement
dated July 3, 2008, as subsequently amended, including by the Fifth Amendment
(as so amended, the "Amended Credit Agreement"). The parties to the Amended
Credit Agreement are the Company, its Luxembourg subsidiary, ION International
S.à r.l. ("ION Sàrl"), certain other foreign and domestic subsidiaries of the
Company, HSBC Bank USA, N.A., as administrative agent, joint lead arranger and
joint bookrunner, ABN AMRO Incorporated, as joint lead arranger and joint
bookrunner, Citibank, N.A., as syndication agent, and the lenders party thereto.
The Amended Credit Agreement provides for a $100.0 million revolving credit
facility and a $125.0 million term loan. Under the revolving credit facility, up
to $60.0 million (or its equivalent in foreign currencies) is available for
non-U.S. borrowings by ION Sàrl and up to $75.0 million is available for
domestic borrowings.
The interest rate on borrowings under the Amended Credit Facility is, at the
Company's option, (i) an alternate base rate (either the prime rate of HSBC Bank
USA, N.A., or a federals funds effective rate plus 0.50%, plus an applicable
interest margin) or (ii) for eurodollar borrowings and borrowings in euros,
pounds sterling or Canadian dollars, a LIBOR-based rate, plus an applicable
interest margin.
At March 31, 2009, the Company was in compliance with all of the financial
covenants under the terms of the Amended Credit Facility and the Bridge Loan
Agreement. However, based upon the Company's first quarter results and its
then-current operating forecast for the remainder of 2009, management for the
Company determined that it was probable that, if the Company and its
subsidiaries did not take any mitigating actions, they would not be in
compliance with one or more of the Company's financial covenants under those two
debt agreements for the period ending September 30, 2009. As a result, the
Company approached the lenders under the Amended Credit Facility to obtain
amendments to relax certain of these financial covenants and pursued the private
placement, which, along with its cash on hand, would generate sufficient funds
to repay the outstanding indebtedness under the Bridge Loan Agreement.
The principal modifications to the terms of the Amended Credit Agreement
resulting from the Fifth Amendment were as follows:
• The Fifth Amendment provided for an increase in applicable interest margins
in the event that the Company's leverage ratio exceeds 2.25 to 1.0 - from
4.5% to up to 5.5% for alternate base rate loans, and from 5.5% to up to
6.5% for LIBOR-rate loans;
• The Fifth Amendment modified certain financial covenant ratios contained in the Amended Credit Agreement, and requires the Company and its domestic subsidiaries to:
• Maintain a minimum fixed charge coverage ratio (which must be not less than 1.50 to 1.0 for the fiscal quarter ending June 30, 2009; 1.00 to 1.0 for the fiscal quarter ending September 30, 2009; 1.10 to 1.0 for the fiscal quarter ending December 31, 2009; 1.15 to 1.0 for the fiscal quarter ending March 31, 2010; 1.25 to 1.0 for the fiscal quarter ending June 30, 2010; 1.35 to 1.0 for the fiscal quarter ending September 30, 2010; and 1.50 to 1.0 the fiscal quarter ending December 31, 2010 and thereafter), and
• Not exceed a maximum leverage ratio (2.75 to 1.0 for the fiscal quarter ending June 30, 2009; 3.00 to 1.0 for the fiscal quarters ending September 30, 2009 and December 31, 2009; 2.75 to 1.0 for the fiscal quarters ending March 31, 2010 and June 30, 2010; 2.50 to 1.0 for the fiscal quarter ending September 30, 2010; and 2.25 to 1.0 for the fiscal quarter ending December 31, 2010 and thereafter);
• The Fifth Amendment modified a restricted payments covenant and permits the Company to apply up to $6.0 million of its available cash on hand to prepay the indebtedness under the Bridge Loan Agreement;
• The Fifth Amendment contained a new defined term -"Excess Cash Flow," and requires the Company to apply 50% of its Excess Cash Flow, if any, calculated with respect to a just-completed fiscal year, to the prepayment of the term loan under the Amended Credit Agreement if the Company's fixed charge coverage ratio or its leverage ratio for the just-completed fiscal year does not meet certain requirements; and
• The Fifth Amendment modifies Section 2.18 of the Credit Agreement to
(i) limit increases in the revolving commitments under the Amended Credit
Facility (which are subject, in any event, to satisfaction of certain
conditions otherwise set forth therein) until the Company has delivered its
compliance certificate for the period ending September 30, 2009, and
thereafter unless certain fixed charge coverage ratio and leverage ratio
requirements are met, and (ii) reduce the maximum revolving credit facility
amount to which the Amended Credit Facility can be increased to
$140.0 million.
The Fifth Amendment also permits the Company to enter into a potential
secured equipment financing transaction if the Company chooses to do so.
However, the Company has no present intention to enter into any such
transaction.
Private Placement. On June 1, 2009, the Company entered into separate
purchase agreements (the "Purchase Agreements") with certain institutional
investors (the "Purchasers") for the private placement of an aggregate of
18,500,000 shares of the Company's common stock at a purchase price per share of
$2.20, representing total gross proceeds of approximately $40.7 million. On
June 1, 2009, the reported closing sales price per share for the Company's
common stock on the New York Stock Exchange was $3.04. Net proceeds to the
Company, after deduction of the fees and expenses related to the private
placement, are expected to be approximately $38.0 million. Barclays Capital Inc.
acted as sole placement agent for the Company with respect to the private
placement of the shares.
The closing for the sale of the shares in the private placement is expected
to occur on June 4, 2009.
The Purchase Agreements contain representations and warranties, covenants and
indemnification provisions that are typical for private placements by public
companies. Pursuant to the Purchase Agreements, the Company has agreed to file
with the Securities and Exchange Commission (the "SEC") a registration statement
with respect to the resale of the shares purchased by the Purchasers under the
Purchase Agreements as soon as reasonably practicable, and in no event more than
five business days following the closing of the transaction.
The shares of common stock subject to the Purchase Agreement have not been
registered under the Securities Act of 1933, as amended, and may not be offered
or sold in the United States absent a registration statement or exemption from
registration.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Shell company transactions.
Not applicable.
(d) Exhibits.
99.1 Press Release dated June 2, 2009.
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