Power Solutions International closed on a new $130 million senior secured revolving credit facility under a credit agreement with Standard Chartered Bank as administrative agent.

As part of the closing of the new facility, Power Solutions International made an initial draw in the amount of $95 million. Under the credit agreement, the company can borrow up to $130 million in the aggregate secured by substantially all of the assets of the company and its wholly-owned subsidiaries with certain customary exceptions. The obligations under the credit agreement are unconditionally guaranteed by certain wholly-owned subsidiaries of the company.

The credit agreement matures on March 26, 2021 and has an optional 60-day extension. Borrowings under the credit facility bear interest at the option of the company, at an annual rate equal to either LIBOR plus 2% per annum or the base rate. The credit agreement is subject to customary events of default and covenants, including requiring the company to maintain minimum adjusted EBITDA levels and a minimum interest coverage ratio, as set forth in the credit agreement.

Power Solutions International utilized amounts drawn under the credit facility to fully redeem and discharge its $55 million senior notes and pay related interest, fully repay and terminate its existing revolving credit facility and for general corporate purposes. After this utilization, on April 2, 2020, the company had availability under the credit facility of $35 million and a cash balance of approximately $16 million. These amounts reflect a net positive cash impact from customer prepayments of approximately $17 million.

“We are pleased to close on this new credit agreement with Standard Chartered Bank, which lowers our overall borrowing costs and provides us with greater financial flexibility going forward,” John Miller, CEO of Power Solutions International, said. “In concert with Weichai, our strategic partner, we look forward to partnering with Standard Chartered as we develop a long term plan for our capital structure.”

Power Solutions International designs, engineers and manufactures engines and power systems.