Item 1.01 Entry into a Material Definitive Agreement.
The information included in Item 8.01 with respect to the Forbearance Agreement
is incorporated by reference into this Item 1.01.
Item 8.01 Other Events.
On March 31, 2020, Jason Incorporated (the "Borrower"), a subsidiary of Jason
Industries, Inc. (the "Company"), elected to defer making the interest payment
of approximately $2.3 million due on March 31, 2020 to lenders under the
Borrower's Second Lien Credit Agreement, originally dated as of June 30, 2014
(the "Second Lien Credit Agreement"). A failure to pay the interest within five
business days of the interest payment date will result in an event of default
under the Second Lien Credit Agreement. Under the Intercreditor Agreement,
originally dated as of June 30, 2014, the lenders under the Second Lien Credit
Agreement are not able to exercise their rights and remedies in connection with
such default for 180 days. As of March 31, 2020, $89.9 million of principal
amount of loans was outstanding under the Second Lien Credit Agreement.
On March 31, 2020, the Borrower and certain of the Company's other subsidiaries
entered into a Forbearance Agreement (the "Forbearance Agreement") with certain
lenders (the "Forbearing Lenders") under the Borrower's First Lien Credit
Agreement, originally dated as of June 30, 2014 (the "First Lien Credit
Agreement"). Pursuant to the Forbearance Agreement, the Forbearing Lenders
agreed to forbear from exercising their rights and remedies during the
Forbearance Period (as described below) as a result of the failure by the
Borrower to make the interest payment due on March 31, 2020 to lenders under the
Second Lien Credit Agreement. The Forbearance Period will terminate on April 30,
2020 or earlier upon prior written notice of certain termination events as set
forth in the Forbearance Agreement. The Forbearance Period will terminate, for
example, upon the Borrower or the other loan parties incurring certain
indebtedness or liens, making certain restricted payments, investments or
dispositions, or making capital expenditures in excess of $1.5 million. The
Forbearance Period will also terminate if the Borrower or any of its
subsidiaries pays any principal, interest, fees or other expenses with respect
to the loans under the Second Lien Credit Agreement during the Forbearance
Period. On March 31, 2020, the Company made its quarterly interest and
amortization payments to the lenders under the First Lien Credit Agreement and
$283.7 million of principal amount of loans was outstanding under the First Lien
Credit Agreement.
Jason currently is considering strategic alternatives to right size its capital
structure and position the Company for long-term growth. In that regard, Jason
is engaged with an ad hoc group of first lien lenders, which represents more
than two-thirds of its outstanding indebtedness under its First Lien Credit
Agreement, dated as of June 30, 2014 (the "Ad Hoc Group"), regarding such
potential strategic alternatives.
With the support of the Ad Hoc Group, the Company is already engaged in
constructive discussions with key stakeholders, including its secured creditors
and the Ad Hoc Group, on a plan to strengthen its business, deleverage its
balance sheet, and achieve a more sustainable capital structure that supports
the Company's long-term business plan and results in long-term
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value generation for the benefit of its employees, customers, vendors, and other
key stakeholders. Jason's liquidity position is strong, enabling it to engage in
constructive discussions and negotiations to achieve a sustainable long-term
capital structure, while continuing to serve its customers without interruption
and operate without impact to its suppliers. The Company continues to take
prudent actions to preserve liquidity during this unprecedented time resulting
from the COVID-19 global pandemic.
This description of the Forbearance Agreement is a summary only and is qualified
in its entirety by reference to the full text of the Forbearance Agreement,
which is filed as Exhibit 10.1 to this report.
Forward Looking Statements
This report includes "forward-looking statements" within the meaning of the
"safe harbor" provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements may be identified by the use of
words such as "anticipate," "believe," "expect," "estimate," "plan," "guidance,"
and "project" and other similar expressions that predict or indicate future
events or trends or that are not statements of historical matters. Such
forward-looking statements with respect to strategies, prospects and other
aspects of the Company's businesses are based on current expectations that are
subject to risks and uncertainties. A number of factors could cause actual
results or outcomes to differ materially from those indicated by such
forward-looking statements. Such factors include, but are not limited to,
adverse effects caused by the COVID-19 pandemic; risks associated with the
ability to identify and complete strategic alternatives; risks associated with
discussions and negotiations with key stakeholders related to the Forbearance
Agreement and that our lenders could accelerate our debt after an event of
default, including the events of default arising from the missed interest
payments due on March 31, 2020; risks associated with the ability to maintain
and preserve liquidity due to a variety of reasons, including the level of
demand for the Company's products, volatility in the prices of raw materials and
the Company's ability to pass along increased costs, competition in the
Company's markets, and the Company's ability to grow and manage growth
profitably; the Company's ability to access additional capital; changes in
applicable laws or regulations; the Company's ability to attract and retain
qualified personnel; the impact of proposed and potential regulations related to
the U.S. Tax Cuts and Jobs Act; the possibility that the Company may be
adversely affected by other economic, business and/or competitive factors; and
other risks and uncertainties identified in the Company's most recent Annual
Report on Form 10-K/A, as such may be amended or supplemented by subsequent
Quarterly Reports on Form 10-Q or other reports filed with the Securities and
Exchange Commission.
Any forward-looking statement made by us in this report speaks only as of the
date on which we make it. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
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10 Forbearance Agreement, dated March 31, 2020, by and among Jason
Incorporated, the Guarantors party thereto and the Forbearing Lenders party
thereto
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