Item 1.01 Entry into a Material Definitive Agreement.
The information included in Item 8.01 with respect to the Second Amended and
Restated Forbearance Agreement is incorporated by reference into this Item 1.01.
Item 8.01 Other Events.
As previously disclosed in the Form 8-K filed on April 6, 2020, Jason
Incorporated (the "Borrower"), a subsidiary of Jason Industries, Inc. (the
"Company"), elected to defer making the interest payment of approximately $2.3
million due on March 31, 2020 to lenders under the Borrower's Second Lien Credit
Agreement, originally dated as of June 30, 2014 (the "Second Lien Credit
Agreement"). The failure to pay the interest within five business days of the
interest payment date resulted in an event of default under the Second Lien
Credit Agreement (the "Interest Payment Default"). Under the Intercreditor
Agreement, originally dated as of June 30, 2014, the lenders under the Second
Lien Credit Agreement are not able to exercise their rights and remedies in
connection with the Interest Payment Default for 180 days. Further, the Borrower
failed to deliver a consolidated budget due on April 29, 2020, which failure,
after giving effect to the grace period applicable thereto, will constitute an
event of default under each of the Borrower's First Lien Credit Agreement,
originally dated as of June 30, 2014 (the "First Lien Credit Agreement") (such
anticipated event of default under the First Lien Credit Agreement, the "First
Lien Budget Delivery Default") and, to the extent the applicable lenders under
the Second Lien Credit Agreement do not waive the corresponding event of default
under the Second Lien Credit Agreement, an event of default under the First Lien
Credit Agreement will occur resulting in an additional event of default under
the First Lien Credit Agreement (such anticipated event of default, together
with the First Lien Budget Delivery Default and the Interest Payment Default,
the "Designated Defaults"). As of March 31, 2020, $89.9 million of principal
amount of loans was outstanding under the Second Lien Credit Agreement.
As previously disclosed in the Form 8-K filed on April 6, 2020, the Borrower and
such of the Company's other subsidiaries entered into an initial forbearance
agreement, subsequently amended and restated on April 30, 2020 as disclosed in
the Form 8-K filed on May 5, 2020, that was set to expire on May 14, 2020. On
May 14, 2020, the Borrower and certain of the Company's other subsidiaries
entered into a Second Amended and Restated Forbearance Agreement (the "Second
Amended and Restated Forbearance Agreement") with the requisite lenders (the
"Forbearing Lenders") under the First Lien Credit Agreement. Pursuant to the
Second Amended and Restated Forbearance Agreement, the Forbearing Lenders agreed
to forbear from exercising their rights and remedies during the Second Amended
and Restated Forbearance Period (as described below) as a result of the
Designated Defaults. The Second Amended and Restated Forbearance Period will
terminate on May 31, 2020 or earlier upon prior written notice of certain
termination events as set forth in the Second Amended and Restated Forbearance
Agreement. Additionally, the Second Amended and Restated Forbearance Agreement
requires that the Borrower and the lenders under the First Lien Credit Agreement
enter into a restructuring support agreement by the expiration of the Second
Amended and Restated Forbearance Period, which may be extended at the Forbearing
Lenders discretion. Pursuant to the Second Amended and Restated Forbearance
Agreement, the Borrower shall pay a
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1.00% forbearance fee (expressed as a percentage of the outstanding principal
amount of the first lien term loans held by such Forbearing Lenders) to the
Forbearing Lenders within one business day of execution of the Second Amended
and Restated Forbearance Agreement.
The Second Amended and Restated Forbearance Period will terminate, for example,
upon the Borrower or the other loan parties incurring certain indebtedness or
liens, making certain restricted payments, investments or dispositions, or
making capital expenditures in excess of $750,000 during the period from May 14,
2020 through May 31, 2020, if the Borrower fails to pay the forbearance fee, or
an event of default occurring under the First Lien Credit Agreement. The Second
Amended and Restated Forbearance Period will also terminate if the Borrower or
any of its subsidiaries pays any principal, interest, fees or other expenses
with respect to the loans under the Second Lien Credit Agreement during the
Second Amended and Restated Forbearance Period.
The Company continues to be engaged in constructive discussions with key
stakeholders, including its secured creditors and the Ad Hoc Group, on a plan to
strengthen its business and its balance sheet, while continuing to serve its
customers, maintain relationships with its suppliers and take prudent actions to
preserve liquidity during COVID-19 global pandemic.
This description of the Second Amended and Restated Forbearance Agreement is a
summary only and is qualified in its entirety by reference to the full text of
the Second Amended and Restated Forbearance Agreement, which is filed as Exhibit
10.1 to this report.
Forward Looking Statements
This report includes "forward-looking statements" within the meaning of the
"safe harbor" provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements may be identified by the use of
words such as "anticipate," "believe," "expect," "estimate," "plan," "guidance,"
and "project" and other similar expressions that predict or indicate future
events or trends or that are not statements of historical matters. Such
forward-looking statements with respect to strategies, prospects and other
aspects of the Company's businesses are based on current expectations that are
subject to risks and uncertainties. A number of factors could cause actual
results or outcomes to differ materially from those indicated by such
forward-looking statements. Such factors include, but are not limited to,
adverse effects caused by the COVID-19 pandemic; risks associated with the
ability to identify and complete strategic alternatives; risks associated with
discussions and negotiations with key stakeholders related to the Second Amended
and Restated Forbearance Agreement and that our lenders could accelerate our
debt after an event of default, including the Designated Defaults; risks
associated with the ability to maintain and preserve liquidity due to a variety
of reasons, including the level of demand for the Company's products, volatility
in the prices of raw materials and the Company's ability to pass along increased
costs, competition in the Company's markets, and the Company's ability to grow
and manage growth profitably; the Company's ability to access additional
capital; changes in applicable laws or regulations; the Company's ability to
attract and retain qualified personnel; the impact of proposed and potential
regulations related to the U.S. Tax Cuts and Jobs Act; the possibility that the
Company may be adversely
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affected by other economic, business and/or competitive factors; and other risks
and uncertainties identified in the Company's most recent Annual Report on Form
10-K/A, as such may be amended or supplemented by subsequent Quarterly Reports
on Form 10-Q or other reports filed with the Securities and Exchange Commission.
Any forward-looking statement made by us in this report speaks only as of the
date on which we make it. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
10 Second Amended and Restated Forbearance Agreement, dated May 14, 2020,
by and among Jason Incorporated, the Guarantors party thereto and the Forbearing
Lenders party thereto
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