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PGEM > SEC Filings for PGEM > Form 8-K on 4-Nov-2013All Recent SEC Filings

Show all filings for PLY GEM HOLDINGS INC

Form 8-K for PLY GEM HOLDINGS INC


4-Nov-2013

Entry into a Material Definitive Agreement, Creation of a Direct Financial O


ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Senior Secured Asset-Based Revolving Credit Facility

General

On November 1, 2013 Ply Gem Holdings, Inc. (the "Company"), Ply Gem Industries, Inc. ("Ply Gem Industries"), a wholly-owned subsidiary of the Company, and Ply Gem Canada, Inc. ("Ply Gem Canada"), Gienow Canada Inc. ("Gienow"), and Mitten Inc. ("Mitten", and together with Ply Gem Canada and Gienow, the "Canadian Borrowers"), entered into an amended and restated senior secured asset-based revolving credit agreement (the "ABL Facility") with UBS Securities LLC, as joint lead arranger and joint bookrunner, Wells Fargo Capital Finance, LLC, as syndication agent, joint lead arranger, joint bookrunner and co-collateral agent, UBS AG, Stamford Branch, as U.S. administrative agent and U.S. collateral agent (the "Administrative Agent"), UBS AG Canada Branch, as Canadian administrative agent and Canadian collateral agent, and a syndicate of financial institutions and institutional lenders.

Structure

The ABL Facility provides for revolving credit financing of up to $250.0 million subject to borrowing base availability, with a maturity of five years, including sub-facilities for letters of credit, swingline loans and borrowings in Canadian dollars and United States dollars. $200.0 million of the ABL Facility is available to Ply Gem Industries and $50.0 million is available to the Canadian Borrowers. In addition, the ABL Facility provides that the revolving commitments may be increased to $350.0 million, subject to certain terms and conditions.

The borrowing base at any time equals the sum (subject to certain eligibility requirements, reserves and other adjustments) of:

90% of the eligible credit card receivables;

85% of the net amount of eligible receivables; and

85% of the net orderly liquidation value of eligible inventory

All borrowings under the ABL Facility will be subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties.

Interest and Fees

Borrowings under the ABL Facility bear interest at a rate per annum equal to, at Ply Gem Industries' option, either (a) a base rate determined by reference to the higher of (1) the corporate base rate of the Administrative Agent, as established at its Stamford Branch, and (2) the federal funds rate plus 0.5% or
(b) a Eurodollar rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, in each case plus an applicable margin. The initial applicable margin for borrowings under the ABL Facility is 0.75% for base rate loans and 1.75% for Eurodollar rate loans. The applicable margin for borrowings under the ABL Facility will be subject to step ups and step downs based on average excess availability under that facility. Swingline loans will bear interest at a rate per annum equal to the base rate plus the applicable margin. In addition to paying interest on outstanding principal under the ABL Facility, Ply Gem Industries is required to pay a commitment fee, in respect of the unutilized commitments thereunder, which fee will be determined based on utilization of the ABL Facility (increasing when utilization is low and decreasing when utilization is high). The commitment fee is 0.375% when the Company's average excess availability is greater than $100.0 million for the last fiscal quarter and 0.25% when the Company's average availability is less than or equal to $100.0 million for the last fiscal quarter. Ply Gem Industries must also pay customary letter of credit fees equal to the applicable margin on Eurodollar loans and agency fees.


Term

The ABL Facility has an initial term of five years (the "Stated Maturity Date"). However, the ABL Facility will mature on (i) the date which is three months prior to the maturity date of Ply Gem Industries' existing 8.25% Senior Secured Notes due 2018 (the "Senior Secured Notes") unless, on or prior to such date, the Senior Secured Notes have been repaid, refinanced or the maturity date thereof extended, in each case, to a date that is at least six months later than the Stated Maturity Date and (ii) the date which is three months prior to the maturity date of Ply Gem Industries' existing 9.375% Senior Notes due 2017 (the "Senior Notes") unless, on or prior to such date, the Senior Notes have been repaid, refinanced or the maturity date thereof extended, in each case, to a date that is at least six months later than the Stated Maturity Date.

Mandatory prepayments

If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the ABL Facility exceeds the lesser of (i) the commitment amount and (ii) the borrowing base, Ply Gem Industries will be required to repay outstanding loans and cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. If the excess availability under the ABL Facility is less than the greater of (a) 12.5% of the lesser of the borrowing base and the aggregate commitments and (b) $22.5 million ($20.0 million for the months of January, February, March, and April) during five consecutive days or certain events of default have occurred, all cash from Ply Gem Industries material deposit accounts (including all concentration accounts) will be swept daily into a collection account controlled by the administrative agent under the ABL Facility and used to repay outstanding loans and cash collateralize letters of credit.

Optional prepayment

Ply Gem Industries may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans at any time without premium or penalty other than customary "breakage" costs with respect to Eurodollar loans.

Amortization and final maturity

There is no scheduled amortization under the ABL Facility. All outstanding loans under the facility are due and payable in full on the Stated Maturity Date (or earlier as described under the caption "Term " above).

Security and Guarantees

All obligations under the ABL Facility are unconditionally guaranteed by the Company and substantially all of the Company's existing and future, direct and indirect, wholly-owned domestic subsidiaries (the "Guarantors"), and in any event by all subsidiaries that guarantee the Senior Secured Notes. All obligations under the ABL Facility, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the assets of Ply Gem Industries and the Guarantors, including:

a first-priority security interest in personal property consisting of accounts receivable, inventory, cash, deposit accounts, and certain related assets and proceeds of the foregoing; and

a second-priority security interest in, and mortgages on, substantially all of Ply Gem Industries' material owned real property and equipment and all assets that secure the Senior Secured Notes on a first-priority basis.

The obligations of the Canadian Borrowers are secured by a first-priority security interest in substantially all of the assets of the Canadian Borrowers and by Ply Gem Industries' and the Guarantors' assets on the same basis as borrowings by Ply Gem Industries are secured under the ABL Facility, plus additional mortgages in Canada, and a pledge by Ply Gem Industries of the remaining 35% of the equity interests of the Canadian Borrowers pledged only to secure the Canadian sub-facility.


Covenants

The ABL Facility requires that if excess availability is less than the greater of (a) 10.0% of the lower of the borrowing base and the aggregate commitments and (b) $17.5 million, Ply Gem Industries must comply with a minimum fixed charge coverage ratio test of 1.0x. In addition, the ABL Facility includes covenants that, subject to significant exceptions, limit Ply Gem Industries' ability and the ability of the Company and Ply Gem Industries' subsidiaries to, among other things, incur debt, incur liens and engage in sale leaseback transactions, make investments and loans, pay dividends, engage in mergers, acquisitions and asset sales, prepay certain indebtedness, amend the terms of certain material agreements, enter into agreements limiting subsidiary distributions, engage in certain transactions with affiliates and alter the business that Ply Gem Industries' conducts.

Events of Default

The ABL Facility contains events of default customary for financings of this type, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, actual or asserted failure of any guaranty or security document supporting the ABL Facility to be in full force and effect and changes of control. If such an event of default occurs, the lenders under the ABL Facility would be entitled to take various actions, including the acceleration of amounts due under the ABL Facility and, subject to the Intercreditor Agreement, all actions permitted to be taken by a secured creditor.

Certain of the agents and lenders or their affiliates have provided investment banking and other financial services to the Company and its affiliates from time to time, for which they received customary fees and commissions, and may also provide these services to the Company or its affiliates from time to time in the future.



ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT

See discussion under Item 1.01 above, which discussion is incorporated by reference herein.


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