JPMorgan Agents New $685MM Star Group Credit Facility

Star Group, a provider specializing in the sale of home heating products and services to residential and commercial customers to heat their homes and buildings, entered into a seventh amended and restated asset-based credit facility agreement with a bank syndicate led by JPMorgan Chase as administrative agent._x000D_
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Under the credit agreement, Star Group has the ability to borrow up to $400 million ($475 million during the heating season from December through April of each year) on a revolving line of credit for working capital purposes, including the issuance of up to $25 million in letters of credit._x000D_
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The credit agreement also provides for a $210 million five year senior secured term loan. Proceeds from the term loan will be used to repay $132.1 million in existing outstanding debt with the $77.9 million balance to be invested and available for certain identified acquisitions and general corporate purposes._x000D_
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JP Morgan Case Bank served as administrative agent and LC issuer, Bank of America served as co-syndication agent. BMO Bank, KeyBank, TD Bank and Wells Fargo Bank served as co-documentation agents and JPMorgan Chase, Bank of American and Citizens Bank served as joint lead arrangers and joint book runners._x000D_
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As was the case under the prior revolving credit facility, under the credit agreement, the company can elect to increase the revolving credit facility size by $200 million without the consent of the bank group. However, the bank group is not obligated to fund the $200 million increase. If the bank group elects not to fund the increase, the company can add additional lenders to the group, with the consent of the agent, which shall not be unreasonably withheld._x000D_
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Obligations under the credit agreement are guaranteed by the company and its subsidiaries and are secured by liens on substantially all of the company’s and its subsidiaries’ assets including accounts receivable, inventory, general intangibles, real property, fixtures and equipment._x000D_
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All amounts outstanding under the credit agreement become due and payable on the facility termination date of September 27, 2029. The term loan is repayable in quarterly payments of $5.3 million, plus an annual payment equal to 25% of the annual Excess Cash Flow as defined in the Credit Agreement (an amount not to exceed $4 million annually), less certain voluntary prepayments made during the year, with final payment at maturity._x000D_
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The Credit Agreement requires the Company to meet certain financial covenants, including a “fixed charge coverage ratio” (as defined in the Credit Agreement) of not less than 1.1:1.0 as long as the Term Loan is outstanding or revolving loan availability is less than the greater of (i) 12.5% of the Line Cap (defined as the lesser of (A) the facility size and (B) the borrowing base) and (ii) $35,000,000. In addition, as long as the Term Loan is outstanding, a “senior secured leverage ratio” (as defined in the Credit Agreement) at any time cannot be more than 3.0:1.0 as calculated during the quarters ending June or September, and at any time no more than 5.5:1.0 as calculated during the quarters ending December or March.