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| LMIA > SEC Filings for LMIA > Form 8-K on 4-Jan-2013 | All Recent SEC Filings |
4-Jan-2013
Entry into a Material Definitive Agreement, Completion of Acquisition or Dispos
Credit Agreement
In connection with the completion of the Acquisition (as defined and discussed below in Item 2.01), on December 28, 2012 (the "Closing Date"), LMI Aerospace, Inc. (the "Company") completed its previously announced refinancing (the "Refinancing"), pursuant to which it entered into a credit agreement among the Company, certain subsidiaries of the Company as guarantors, the lenders party thereto, Royal Bank of Canada, as Administrative Agent, and Wells Fargo Bank, National Association, as Syndication Agent (the "Credit Agreement"). The Credit Agreement provides for senior secured credit facilities in an aggregate principal amount of up to $300.0 million comprising (i) a revolving credit facility of up to $75.0 million (the "Revolving Facility") and (ii) a term loan facility of $225.0 million (the "Term Loan Facility"). The Revolving Facility includes a sublimit for one or more swingline loans and letters of credit, to be provided from time to time and subject to certain conditions. The Revolving Facility will mature on the fifth anniversary of the Closing Date and the Term Loan Facility will mature on the sixth anniversary of the Closing Date.
The Term Loan Facility bears interest at a rate per annum equal to, at the option of the Company, LIBOR, adjusted for statutory reserve requirements ("Adjusted LIBOR"), plus 4.75%, with an Adjusted LIBOR "floor" of 1.25%, or an alternate base rate plus 3.75%, with an alternate base rate "floor" of 2.25%. Borrowings under the Revolving Facility bear interest at a rate per annum equal to, at the option of the Company, Adjusted LIBOR plus 4.75%, with an Adjusted LIBOR "floor" of 1.25%, or an alternate base rate plus 3.75%, with an alternate base rate "floor" of 2.25%; provided that from and after the first full fiscal quarter ending after the Closing Date, the applicable margin for the Revolving Facility will be subject to a step-down pricing grid based on the consolidated total net leverage ratio of the Company.
The Term Loan Facility is required to be repaid in quarterly principal installments of $562,500 each, beginning March 31, 2013 and continuing through 23 consecutive calendar quarters, followed by a final principal payment of approximately $212.1 million due on December 28, 2018, the Term Loan Facility maturity date. In addition, the Company is required to make the following mandatory prepayments in respect of the Term Loan Facility: (a) 50% of the excess cash flow of the Company with step downs to 25% and 0% when the Company maintains specified consolidated total net leverage ratio levels, (b) 100% of the net cash proceeds of certain asset sales (including insurance and condemnation proceeds), subject to reinvestment rights and certain other exceptions, and (c) 100% of the net proceeds of other debt obligations incurred by the Company, subject to certain exceptions.
Obligations under the Credit Agreement are guaranteed by the Company's existing and future direct and indirect material domestic subsidiaries, subject to certain customary limited exceptions. The Credit Agreement is secured by first priority perfected security interests in substantially all the Company's and its direct subsidiaries' assets and the assets of each subsidiary guarantor, whether owned as of the Closing Date or thereafter acquired, including a first priority pledge of the equity interests of the Company that are owned by the Company or any subsidiary guarantor, 100.0% of the non-voting equity interests and 65.0% of the voting equity interests of each non-U.S. subsidiary guarantor (subject to certain limited exceptions). The Credit Agreement requires compliance with certain financial covenants providing for maintenance of a minimum consolidated interest coverage ratio and maintenance of a maximum consolidated total net leverage ratio.
The Credit Agreement contains certain customary negative covenants, which . . .
On December 28, 2012, pursuant to the Membership Interest Purchase Agreement dated as of December 5, 2012 (the "Purchase Agreement"), by and among the Company, Valent Aerostructures, LLC, a Delaware limited liability company ("Valent"), and the members of Valent (collectively, the "Sellers"), the Company completed its previously announced acquisition (the "Acquisition") of all of the issued and outstanding equity interests of Valent. Pursuant to the Purchase Agreement, Valent became a wholly-owned subsidiary of the Company as a result of the Acquisition. The aggregate acquisition value provided by the Company was approximately $237.0 million, plus approximately $9.7 million of certain retained obligations of Valent. The purchase consideration paid to the Sellers was approximately $237.0 million, less retained indebtedness of approximately $12.6 million, subject to adjustment for working capital and transaction expenses (the "Purchase Price"). $15.0 million of the Purchase Price was paid in the form of 783,798 shares of the Company's common stock, par value $0.02 per share, and the remainder was paid in cash. In addition, the Sellers are entitled to receive up to $40.0 million in the form of an earn-out if Valent reaches certain performance milestones as measured by the adjusted EBITDA of Valent in 2013, payable in 2014 and 2015.
A copy of the Purchase Agreement was filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated December 6, 2012 and is incorporated herein by reference. Reference is made to the Purchase Agreement for a more complete understanding of the Acquisition. The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement.
On December 28, 2012, the Company entered into a Credit Agreement with certain subsidiaries of the Company as guarantors, the lenders party thereto, Royal Bank of Canada, as Administrative Agent, and Wells Fargo Bank, National Association, as Syndication Agent. Reference is made to Item 1.01 of this Report for a summary of the Credit Agreement, which is incorporated hereto by such reference.
On December 28, 2012, in connection with the completion of the Acquisition, the
Company issued to the Sellers an aggregate of 783,798 shares of the Company's
common stock, par value $0.02 per share, having an aggregate value of $15.0
million and representing the non-cash component of the Purchase Price paid by
the Company in the Acquisition (the "Shares"). The Shares were issued pursuant
to the terms and conditions set forth in the Purchase Agreement, a summary of
which is set forth in Item 2.01 of this Report. The Shares were issued in a
private offering pursuant to the exemption from registration contained in
Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of
Regulation D promulgated thereunder.
Effective as of January 1, 2013, the Company appointed each of Charles Newell, age 57, and Henry Newell, age 48, as Co-President of the Company's Aerostructures segment, in accordance with the Employment Agreements described above in Item 1.01. Reference is made to Item 1.01 of this Report for a summary of the Employment Agreements, which is incorporated hereto by such reference.
Since 2009, Charles Newell has served as Chief Executive Officer of Valent. Since 2000, Charles Newell has also been a manager of Tech Investments, LLC and Tech Investments II, LLC, each a private equity fund and former equity owner of Valent (collectively, the "Funds"). Charles Newell received a BS in Business and Accounting from the University of Kansas.
Since 2009, Henry Newell has served as Chief Executive Officer of Business Development with Valent. Since 2000, Henry Newell has also been a manager of the Funds. Henry Newell received a BS in Business from the University of Kansas.
Prior to the Acquisition (and during the periods in which Charles Newell and Henry Newell, respectively, were employed by Valent), Valent was not a parent, subsidiary or other affiliate of the Company. Charles Newell and Henry Newell are brothers and, except for such relationship, there are no family relationships between Charles Newell and Henry Newell and any other director, executive officer or person nominated or chosen by the Company to become a director or executive officer. Paul Newell, the Director of Process Improvement at Valent, is the brother of Charles and Henry Newell. Paul Newell received fiscal year 2012 compensation of approximately $140,000.
On December 31, 2012, the Company issued a press release announcing the completion of the Acquisition and the Refinancing (the "Press Release"). A copy of the Press Release is attached as Exhibit 99.1 hereto and incorporated herein by reference.
(a) Financial statements of business acquired.
The financial statements required to be filed as part of this Report will be filed by amendment to this Report as soon as practicable but not later than March 11, 2013.
(b) Pro forma financial information.
The historical pro forma financial information required to be filed as part of this Report will be filed by amendment to this Report as soon as practicable but not later than March 11, 2013.
(d) Exhibits.
See the Exhibit Index which is hereby incorporated by reference.
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