According to an 8K filed with the SEC, Bank of America served as administrative agent for an amendment to The Middleby Corporation’s senior credit facility. Middleby also launched a $550 million convertible notes offering and expects to enter into a related capped call hedge transaction, which will offset potential dilution from the conversion feature of the notes.
“Consummation of these strategic transactions will enhance our capital structure and provide greater financial flexibility as we lead our business into the future. Most importantly, these actions reinforce continued investment in our operating and strategic initiatives supporting long-term growth objectives,” Tim Fitzgerald, CEO of Middleby, said.
The amended credit agreement will provide for a senior secured credit facility in an aggregate principal amount of $3.1 billion, consisting of a $2.75 billion multi-currency revolving credit facility and a $350 million term loan facility (after giving effect to the $400 million prepayment upon effectiveness of the amendment). The maturity date remains unchanged at Jan. 31, 2025.
The threshold leverage ratio restricting the incurrence of debt has been increased to 5.5 to 1 from 4 to 1 through the maturity of the facility.
The borrowing cost under the senior credit facility remains unchanged by the amendment at total net debt leverage ratios of below 4 to 1. Pricing at newly established leverage tiers above four times increase to a maximum of LIBOR plus 250 basis points at the highest allowable borrowing levels.
The amended credit agreement sets forth a secured net debt leverage ratio of 3.5 to 1, with an initial elevated period providing for a higher covenant of 4.5 to 1 times through March 2021 and 4.25 to 1 times through June 2021.
At the end of the Middleby’s fiscal second quarter, the company’s net debt as defined under the credit facility amounted to $1,786.7 million and the secured leverage ratio was 2.99 to 1. On a pro-forma basis, after reflecting the anticipated repayment of $400 million of the senior term loan upon effectiveness of the amendment, the net debt under the senior credit facility would amount to $1,386.7 million and the secured leverage ratio would amount to 2.32.
Borrowing availability under existing facilities after giving effect to the contemplated transactions would amount to $1.4 billion.
The Middleby Corporation develops, manufactures, markets and services equipment used in the commercial foodservice, food processing and residential kitchen equipment industries.
