Enerpac Tool Group entered into an amended and restated credit agreement on Oct. 16 among the company, the initial subsidiary borrowers, guarantors and lenders party to it, and PNC Bank as administrative agent.
The agreement amended and restated in its entirety a Sept. 9, 2022, credit agreement among the same parties that, as previously amended, provided for a $625 million revolving credit facility and a $200 million term loan and was scheduled to mature on Sept. 9, 2027.
The new agreement provides for a $550 million revolving credit facility, with a $200 million sublimit for borrowings denominated in euros, pounds sterling or other mutually acceptable foreign currencies, and a $300 million term loan. Enerpac will have the option to request to increase the loan facilities and/or enter into one or more additional term loan tranches in an aggregate amount of up to $425 million, subject to customary conditions, including the commitment of the participating lenders.
Borrowings under both the revolving credit and term loan facilities will mature on Oct. 16, 2031. They are secured by substantially all personal property assets of Enerpac and its domestic subsidiary guarantors (other than certain specified excluded assets) and certain of the equity interests of certain Enerpac subsidiaries.
The term loan is required to be repaid in principal installments of $0.9375 million per quarter beginning March 1, 2028, increasing to $1.875 million per quarter beginning March 1, 2029, and to $3.75 million per quarter beginning March 1, 2030, with the remaining balance due at maturity.
Borrowings initially bear interest at term SOFR plus 1.125% per annum. The spreads above term SOFR or the base rate are subject to adjustments based on Enerpac’s net leverage ratio. They range from 1.125% to 1.875% per annum for loans bearing interest at term SOFR and from 0.125% to 0.875% per annum for loans bearing interest at the base rate. A non-use fee, also based on the net leverage ratio, is payable quarterly on the average daily unused portion of the revolving credit facility and ranges from 0.150% to 0.275% per annum.
The agreement contains customary limits and restrictions concerning, among other things, investments, asset dispositions, indebtedness, liens on assets and dividends and other distributions. Its financial covenants require Enerpac not to permit 1) the net leverage ratio, determined as of the end of each fiscal quarter, to exceed 3.75 to 1.00 (or, at Enerpac’s election and subject to certain conditions, 4.25 to 1.00 for the testing period during which certain material acquisitions occur and the next four testing periods) and 2) the interest coverage ratio, determined as of the end of each fiscal quarter, to be less than 3.00 to 1.00.
The agreement also contains customary events of default. If an event of default occurs and is continuing, the lenders may, among other things, terminate their obligations under the agreement and require the borrowers to repay all amounts due. In the case of an event of default arising from certain events of bankruptcy, insolvency or reorganization, the lenders’ obligations will automatically terminate and all outstanding amounts will automatically become due and payable.
Enerpac filed the agreement as Exhibit 10.1 to a Form 8-K.
