8-KFinancial EventsExhibits & Filings

OLD DOMINION FREIGHT LINE, INC. 8-K Report, Financial Obligation (Jan 6, 2011)

Filed January 6, 2011For Securities:ODFL

Summary

Old Dominion Freight Line, Inc. (ODFL) has filed an 8-K report detailing a significant financing transaction completed on January 3, 2011. The company issued a total of $95 million in privately-placed Senior Notes, consisting of $50 million in Tranche A Notes and $45 million in Tranche B Notes, to a group of institutional investors. These notes are unsecured and rank pari passu with other senior unsecured indebtedness. The proceeds are intended for planned capital expenditures, general corporate purposes, and to refinance existing debt, including a $60 million paydown on its existing credit facility. This issuance provides ODFL with long-term capital and demonstrates the company's ability to access private debt markets. The report also outlines key financial covenants associated with these notes, including maximum debt-to-capitalization ratios, limitations on priority debt, and minimum fixed charge coverage ratios. An amendment to the company's Bank Credit Agreement was also made concurrently to accommodate this new financing. Investors should note the specific interest rates and maturity dates for each tranche of notes and the conditions for default and acceleration.

Key Highlights

  • 1Issuance of $95 million in privately-placed Senior Notes: $50 million in Tranche A Notes and $45 million in Tranche B Notes.
  • 2Notes are unsecured and rank pari passu with other senior unsecured indebtedness.
  • 3Tranche A Notes mature on January 3, 2018, with a 4.00% annual interest rate.
  • 4Tranche B Notes mature on January 3, 2021, with a 4.79% annual interest rate.
  • 5Proceeds to be used for capital expenditures, general corporate purposes, and refinancing existing debt.
  • 6Significant debt paydown of $60 million under the Amended and Restated Credit Agreement.
  • 7Key financial covenants include limits on debt-to-capitalization, priority debt, and minimum fixed charge coverage.

Frequently Asked Questions

The proceeds from the issuance of the Senior Notes are intended for planned capital expenditures, general corporate purposes, and to refinance existing indebtedness. Specifically, $60 million was used to pay down borrowings under the company's Bank Credit Agreement.

The company issued $50 million in Tranche A Notes due January 3, 2018, carrying a 4.00% interest rate, and $45 million in Tranche B Notes due January 3, 2021, with a 4.79% interest rate. Both tranches are unsecured and rank equally with other senior unsecured debt. Interest is payable semiannually.

The financing agreement includes several financial covenants designed to protect the lenders. These include a maximum consolidated debt to consolidated total capitalization ratio (not to exceed 60%), a limitation on priority debt (not exceeding 20% of consolidated net worth), and a minimum fixed charge coverage ratio (not to be less than 1.75 to 1.00).

As part of this financing, Old Dominion Freight Line, Inc. used a portion of the proceeds to pay down $60 million in borrowings under its Amended and Restated Credit Agreement. An amendment to this credit agreement was also executed to allow for this new financing arrangement and related covenants.