The amendment is effective June 15, and includes a new covenant limiting capital expenditures, and amends other covenants to further restrict the ability of the company to pay dividends and distributions and the ability of the company and its subsidiaries to make acquisitions.
In full, the amendment does the following:
1. Reduces the minimum consolidated interest coverage ratio Manitowoc is required to maintain pursuant to the credit agreement for each fiscal quarter ending between 30 September, 2009 and 30 June, 2012 from between 2.75 to 1.00 and 3.00 to 1.00 to between 1.875 to 1.00 and 2.75 to 1.00, depending on the fiscal quarter;
2. Increases the maximum consolidated total leverage ratio Manitowoc is permitted to maintain pursuant to the credit agreement for each fiscal quarter ending between 30 June, 2009 and 30 September, 2012 from between 3.50 and 1.00 and 4.00 to 1.00 to between 4.00 to 1.00 and 7.375 to 1.00, depending on the fiscal quarter;
3. Adds a new covenant requiring Manitowoc to maintain a consolidated senior secured leverage ratio for each fiscal quarter ending on or after 30 June, 2011 of not in excess 3.50 to 1.00 and 5.25 to 1.00, depending on the fiscal quarter;
4. Increases the applicable rate payable on alternate base rate loans from between 0.50% and 1.75% to between 2.75% and 4.00%, in each case based on the company’s consolidated total leverage ratio;
5. Increases the applicable rate payable on Eurocurrency loans from between 2.00% and 3.25% to between 3.75% and 5.00%, in each case based on the company’s consolidated total leverage ratio;
6. Adds or increases mandatory prepayment requirements upon sale the sale of equity, from excess cash flow or in connection with the sale of long-term debt or accounts receivable in securitisation transactions, in each case in certain circumstances based on the company’s consolidated total leverage ratio;
7. Adds a new covenant limiting capital expenditures;
8. Eliminates the company’s option to increase the borrowing capacity of the revolving facility or Term Loan A; and
9. Amends certain covenants to further restrict the ability of the company to pay dividends and distributions and the ability of the company and its subsidiaries to make acquisitions.
The announcement follows Terex raising USD612m through a capital markets transaction and amending its bank credit facility, and Manitex extending the maturity date of its credit facility with Comerica Bank by two years to 1 April, 2012.
“Our amendment was not driven by liquidity issues, but rather due to the financial ratio impact of lower sales volumes and reduced profitability during these challenging economic times,” said Glen Tellock, Manitowoc’s chairman and chief executive officer.
“We are pleased that our lenders agreed with the terms of the proposed amendment, which not only gives us the flexibility to manage our businesses during this downturn and continue our debt reduction objectives, but also enables us to strongly position the company to take full advantage of the next upturn.”
