Summary
Old Dominion Freight Line, Inc. (ODFL) filed an 8-K on May 1, 2006, reporting a significant material definitive agreement: the issuance of $100,000,000 in privately-placed Series A Senior Notes, Tranche A, on April 25, 2006. An additional $75,000,000 in Tranche B notes are scheduled for issuance on June 15, 2006. These notes mature on April 25, 2016, carry a fixed interest rate of 5.85% per annum, payable semi-annually, and are unsecured. The company utilized the proceeds from the Tranche A notes to refinance existing debt, specifically paying down $50,000,000 under its Bank Credit Agreement, with the remainder allocated for planned capital expenditures and general corporate purposes. This issuance required an amendment to the existing Bank Credit Agreement to permit the incurrence of this new debt under specific financial covenants, including limits on consolidated debt to total capitalization, priority debt, and a minimum fixed charge coverage ratio. The filing also notes the potential for future private note issuances under the same agreement, up to a total of $500,000,000.
Key Highlights
- 1ODFL issued $100 million in privately-placed Series A Senior Notes (Tranche A) on April 25, 2006, with another $75 million (Tranche B) due June 15, 2006.
- 2The notes have a 10-year maturity (April 25, 2016) and a fixed interest rate of 5.85% per annum.
- 3Proceeds from the Tranche A notes were used to refinance approximately $50 million of existing debt and for capital expenditures and general corporate purposes.
- 4The issuance required an amendment to ODFL's Bank Credit Agreement to accommodate the new debt.
- 5The Note Purchase Agreement allows for potential future private note issuances up to a total of $500 million.
- 6The Series A Notes are unsecured and rank pari passu with other senior unsecured indebtedness.
- 7Key financial covenants include a maximum debt-to-capitalization ratio (60%), a limitation on priority debt (20% of net worth), and a minimum fixed charge coverage ratio (1.75x).