Item 1.01 Entry into a Material Definitive Agreement.
On
The Note Purchase Agreement provides that the Company will issue the Notes to
the Purchasers, and that the Purchasers will pay the aggregate purchase price
for the Notes to the Company, on
The Note Purchase Agreement requires the Company to offer to prepay all of the
outstanding Notes in full, together with unpaid accrued interest to the date of
prepayment, in the event of a "change in control" of the Company. For purposes
of the Note Purchase Agreement, a "change in control" of the Company means any
person or entity, or any group thereof acting in concert, together with their
respective affiliates, directly or indirectly controlling or owning
(beneficially or otherwise) in the aggregate more than 50% of the aggregate
voting power of the issued and outstanding voting interests of the Company. The
Note Purchase Agreement also provides that the Company may, at its option and at
any time, prepay all or part of the Notes, in integral multiples of
The Note Purchase Agreement contains customary representations, warranties and covenants, including financial covenants (a) not to permit the ratio of consolidated funded debt, determined as of the end of each fiscal quarter, to consolidated cash flow, as measured on the previous consecutive four fiscal quarters (the "Leverage Ratio"), to exceed 3.50 to 1.00 and (b) not to permit the ratio of adjusted consolidated funded debt, determined as of the end of each fiscal quarter, to consolidated net worth, determined as of that date, to exceed 0.80 to 1.00. The Note Purchase Agreement also restricts the Company and its subsidiaries from creating, issuing, incurring, assuming or permitting to exist any Priority Debt (as defined in the Note Purchase Agreement), if after giving effect thereto, the aggregate outstanding principal amount of all Priority Debt would exceed 20% of the Company's consolidated net worth.
The Note Purchase Agreement includes a "most favored lender" provision generally
requiring that, in the event any agreement or series of agreements of the
Company or any of its subsidiaries creating or evidencing indebtedness for
borrowed money, or any renewal, extension, amendment, supplement, restatement,
replacement or refinancing thereof, in each case, in a principal amount
outstanding or available for borrowing equal to or greater than
The Note Purchase Agreement contains customary events of default, including cross-defaults relating to other indebtedness. If certain events of default occur and are continuing, holders of a majority in aggregate principal amount of the Notes then outstanding may, upon notice to the Company, declare all the Notes then outstanding to be immediately due and payable. The occurrence of certain other events of default involving insolvency or bankruptcy of the Company or any of its subsidiaries will result in all the Notes then outstanding becoming immediately due and payable without any action by or on behalf of any holder of Notes. In addition, in the case of certain non-payment
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defaults that have occurred and are continuing, any holder of Notes affected by the default may, upon notice to the Company, declare all such holder's Notes to be immediately due and payable.
The Notes are unsecured and rank at least pari passu with all of the Company's other unsecured senior debt.
Interest on the Notes will accrue at a rate of 5.68% per annum, computed on the
basis of a 360-day year of 12 30-day months; provided, that: (a) if during any
fiscal quarter the Leverage Ratio (rounded to the second decimal place, with
.005 being rounded upward) for the immediately preceding period is greater than
3.00 to 1.00, but the Notes had an investment grade rating from any nationally
recognized statistical rating organization during that fiscal period, then the
interest rate on each of the Notes will be 5.93%; (b) if during any fiscal
quarter the Leverage Ratio (rounded to the second decimal place, with .005 being
rounded upward) for the immediately preceding period is greater than 3.00 to
1.00 but less than or equal to 3.25 to 1.00, and the Notes did not have an
investment grade rating from any nationally recognized statistical rating
organization during that fiscal period, then the interest rate on each of the
Notes will be 6.18%; and (c) if during any fiscal quarter the Leverage Ratio
(rounded to the second decimal place, with .005 being rounded upward) for the
immediately preceding period is greater than 3.25 to 1.00, and the Notes did not
have an investment grade rating from any nationally recognized statistical
rating organization during that fiscal period, then the interest rate on each of
the Notes will be 6.68%; provided, further, that, to the extent permitted by
law, interest on any overdue payment of interest and, during the continuance of
an event of default, on any unpaid balance and on any overdue payment of any
"makewhole amount" will accrue at a rate equal to the greater of (x) 2.00% per
annum greater than it otherwise would have been or (y) 2.00% over the rate of
interest publicly announced by
Net proceeds from the issuance of the Notes will be used for general corporate purposes, including funding capital expenditures and investments, and for refinancing existing indebtedness.
Certain Purchasers are also holders of notes previously issued by the Company in private placement offerings.
The foregoing description of the Note Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Note Purchase Agreement, a copy of which is attached hereto as Exhibit
10.1 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Reference is made to the information set forth in Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description Note Purchase Agreement, dated as ofJanuary 24, 2023 , amongCHS Inc. and 10.1 each of the Purchasers signatory thereto Cover Page Interactive Data File (embedded within the Inline XBRL 104 document)
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