01—Abstract
Summary
Summary of the 8-K filed March 18, 2024. Cited figures are marked; the original filing is the authoritative source.
Westinghouse Air Brake Technologies Corporation (Wabtec) entered into a Term Credit Agreement dated March 14, 2024 (the Closing Date), providing a new unsecured term loan facility in an aggregate initial principal amount of $225.0 milliona.
The facility matures on the fifth anniversary of the Closing Date, and its obligations are guaranteed by certain of the Company's subsidiaries. The filing states that the Company may pay dividends and make other restricted payments so long as no default or event of default exists and it is in compliance with the financial covenants. The agreement requires the Company to maintain an Interest Coverage Ratio (EBITDA to Interest Expense for the four quarters then ended) of at least 3.0 to 1.0 and a Leverage Ratio (net debt to EBITDA for the four consecutive quarters) not exceeding 3.5 to 1.0.
The Company may increase the maximum Leverage Ratio upon completion of a Material Acquisition, by notice to the administrative agent. Interest rate spreads range from 1.000%b to 1.750% for Term SOFR and Daily Simple SOFR-based borrowings and from 0.000% to 0.750% for Alternate Base Rate borrowings, based on the lower of the public rating or leverage ratio pricing. The agreement contains customary affirmative and negative covenants, including limits on indebtedness, liens, fundamental changes, restricted payments and restrictive agreements, along with customary events of default.
Certain lenders and their affiliates have had or may have other financial service relationships with the Company. The filing also notes that the Company previously disclosed this transaction in its Form 8-K filed March 11, 2024, and that the full agreement is filed as Exhibit 10.1.
02—Key points
Key Highlights
- Entered a Term Credit Agreement dated March 14, 2024 providing a $225.0 million unsecured term loan facility
- Facility matures on the fifth anniversary of the March 14, 2024 Closing Date
- Interest spreads range 1.000%–1.750% for Term SOFR/Daily Simple SOFR borrowings and 0.000%–0.750% for Alternate Base Rate borrowings, tied to the lower of public rating or leverage ratio pricing
- Financial covenants require an Interest Coverage Ratio of at least 3.0 to 1.0 and a Leverage Ratio not exceeding 3.5 to 1.0
- Leverage Ratio cap may be increased upon completion of a Material Acquisition
- Obligations guaranteed by certain subsidiaries; covenants restrict indebtedness, liens, fundamental changes, restricted payments and restrictive agreements
- Dividends and restricted payments permitted if no default exists and financial covenants are met
03—Questions
Frequently Asked Questions
How large is the new credit facility and when does it mature?
The 2024 Term Loan Facility has an aggregate initial principal amount of $225.0 million and matures on the fifth anniversary of the March 14, 2024 Closing Date.
Is the facility secured?
No. The 2024 Term Loan Facility is unsecured, although the Company's obligations under the agreement are guaranteed by certain of its subsidiaries.
What financial covenants must Wabtec maintain?
The Company must maintain an Interest Coverage Ratio (EBITDA to Interest Expense for the four quarters then ended) of at least 3.0 to 1.0 and a Leverage Ratio (net debt to EBITDA for the four consecutive quarters) not exceeding 3.5 to 1.0. The Leverage Ratio maximum may be increased upon completion of a Material Acquisition.
Can Wabtec continue paying dividends under the new agreement?
Yes, provided that at the time of declaration, and after giving effect to such payments, no default or event of default exists and the Company is in compliance with the financial covenants.
How is the interest rate determined?
Spreads depend on the lower of the Company's public rating or leverage ratio pricing. They range from 1.000% to 1.750% for Term SOFR and Daily Simple SOFR-based borrowings and from 0.000% to 0.750% for Alternate Base Rate borrowings.
04—Continue