8-KMaterial AgreementsFinancial EventsExhibits & Filings

FASTENAL CO 8-K Report, Material Agreement (Dec 19, 2012)

Filed December 19, 2012For Securities:FAST

Summary

On December 13, 2012, Fastenal Company (FAST) announced the execution of a new $125 million unsecured revolving credit facility with Wells Fargo Bank, National Association. This facility, which matures on December 13, 2015, provides the company with significant financial flexibility, including a $40 million letter of credit subfacility and a $10 million swing line loan subfacility. The agreement is guaranteed by Fastenal's material domestic subsidiaries, offering lenders additional security. The new credit facility introduces specific interest rate options, primarily based on LIBOR plus a spread of 0.875%, and includes commitment fees based on the average quarterly utilization of the facility. Crucially, the agreement imposes financial covenants, requiring Fastenal to maintain a consolidated total leverage ratio of no more than 1.00 to 1.00 and a minimum EBITDA of $125 million. These covenants, along with customary affirmative and negative covenants and events of default, are designed to ensure the company's financial health and repayment ability.

Key Highlights

  • 1Fastenal Company secured a new $125 million unsecured revolving credit facility, providing increased financial flexibility.
  • 2The credit facility has a maturity date of December 13, 2015.
  • 3The facility includes a $40 million letter of credit subfacility and a $10 million swing line loan subfacility.
  • 4Interest rates are primarily tied to LIBOR plus a spread of 0.875%.
  • 5Commitment fees range from 0.10% to 0.125% based on facility utilization.
  • 6Key financial covenants include a maximum consolidated total leverage ratio of 1.00x and a minimum annual EBITDA of $125 million.
  • 7The agreement is guaranteed by Fastenal's material domestic subsidiaries.

Frequently Asked Questions

The new $125 million credit facility provides Fastenal with enhanced financial flexibility to support its ongoing operations, potential growth initiatives, and general corporate purposes. It acts as a backstop for liquidity needs and allows for efficient management of short-term working capital requirements.

Fastenal must maintain a consolidated total leverage ratio not exceeding 1.00 to 1.00 and ensure its EBITDA over any consecutive four-quarter period is at least $125 million. The agreement also includes customary negative covenants restricting actions such as mergers, asset sales, investments, and the granting of liens.

Fastenal will pay interest on any borrowed amounts, which is based on LIBOR plus 0.875%. Additionally, there are commitment fees on the unused portion of the facility (0.10% or 0.125% per annum) and fees for issuing letters of credit (0.875% per annum plus an issuance fee of 0.075% of the face amount).

The credit agreement outlines customary events of default. If an event of default occurs, lenders can terminate their commitments and accelerate all outstanding loans, potentially requiring the company to provide cash collateral for outstanding letters of credit.