ALEXANDER & BALDWIN, INC. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On
Revolving Credit Facility Amendment: OnAugust 31, 2021 , the Company and its wholly owned subsidiaries,Alexander & Baldwin, LLC ("A&B LLC "),Alexander & Baldwin, LLC ,Series R, Alexander & Baldwin, LLC ,Series T, Alexander & Baldwin, LLC , Series M,Alexander & Baldwin Investments, LLC ("A&B Investments"),A&B II, LLC andGrace Pacific LLC entered into a Third Amended and Restated Credit Agreement ("A&B Revolver") withBank of America N.A ., as administrative agent,First Hawaiian Bank ,KeyBank National Association ,Wells Fargo Bank, National Association , and other lenders party thereto, which amended and restated the existing$450 million committed revolving credit facility ("Revolving Credit Facility"). The Company is required to pay certain upfront fees to the agents and lenders under the A&B Revolver, together with additional transaction fees and expenses including legal fees, in the aggregate amount of approximately$4 million . The terms of the A&B Revolver are substantially unchanged from the preceding Revolving Credit Facility, with the following notable changes: •Increases the total revolving commitments to$500 million , •Extends the term of the Revolving Credit Facility toAugust 29, 2025 and includes two six-month optional term extensions (February 27, 2026 for the first optional extension andAugust 27, 2026 for the second optional extension), •Amends certain covenants (including those described below), •Adds a ratings-based pricing grid if the Company is rated investment grade (BBB-/Baa3 or higher) by at least two of the three rating agencies (S&P Global, Inc.,Moody's Investors Services, Inc. andFitch, Inc. ) ("Investment Grade Rating") and the Company makes an irrevocable election to switch from the financials-based applicable rate, •Reduces the interest rates and fees charged under the financials-based pricing grid of the Revolving Credit Facility, •Termination of the SwingLine Loan onAugust 31, 2021 and replacement with a LIBOR Daily Rate Loan, in addition to Bid Loans at such time when the Company maintains an Investment Grade Rating, and •Upon consummation of the sale of all or substantially all of the business ofGrace Pacific LLC to an entity unaffiliated with the Company and its subsidiaries,Grace Pacific LLC andA&B II, LLC are automatically released from their respective guaranty obligations.
The original pricing grid under the Company's Revolving Credit Facility and the amended pricing grids as provided in the A&B Revolver are as follows:
Original Pricing Grid:
Pricing Level Total Debt to Total Eurodollar Rate Base Rate Letter of Credit Fee
Adjusted Asset Value Ratio
I > 0.45 to 1.0 2.05% 1.05% 2.05%
< 0.45 to 1.0 but > 0.35 to
II 1.0 1.85% 0.85% 1.85%
< 0.35 to 1.0 but > 0.25 to
III 1.0 1.65% 0.65% 1.65%
< 0.25 to 1.0 but > 0.15 to
IV 1.0 1.45% 0.45% 1.45%
V < 0.15 to 1.0 1.25% 0.25% 1.25%
--------------------------------------------------------------------------------
Amended Pricing Grid:
Financials-Based Applicable Rate
Pricing Level Total Debt to Total Eurodollar Rate Base Rate Letter of Credit Fee
Adjusted Asset Value Ratio
I <35.00% 1.05% 0.05% 1.05%
II >35.00% - <40.00% 1.10% 0.10% 1.10%
III >40.00% - <45.00% 1.15% 0.15% 1.15%
IV >45.00% - <50.00% 1.25% 0.25% 1.25%
V >50.00% - <55.00% 1.30% 0.30% 1.30%
VI >55.00% 1.50% 0.50% 1.50%
Ratings-Based Applicable Rate
Pricing Level Debt Rating Eurodollar Rate Base Rate Letter of Credit Fee
I > A-/A3/A- 0.725% -% 0.725%
II BBB+/Baa1/BBB+ 0.775% -% 0.775%
III BBB/Baa2/BBB 0.850% -% 0.850%
IV BBB-/Baa3/BBB- 1.050% 0.050% 1.050%
V A&B LLC, Grace Pacific LLC,
Alexander & Baldwin, LLC, Series R, Alexander & Baldwin, LLC , Series T,
Alexander & Baldwin, LLC , Series M, A&B Investments and A&B II, LLC , had a $50
million term loan agreement, dated as of February 26, 2018 with Wells Fargo
Bank, National Association , as administrative agent, and a syndicate of other
lenders party thereto ("Bank Syndicated Loan"). On August 31, 2021 , concurrent
with the closing of the A&B Revolver, the Company drew $50 million on the A&B
Revolver and repaid the Bank Syndicated Loan in full, plus accrued interest, and
satisfied all obligations thereto.
Prudential Private Shelf Facility Amendment: On August 31, 2021 , the Company,
A&B LLC, Alexander & Baldwin, LLC , Series R, Alexander & Baldwin, LLC , Series T,
Alexander & Baldwin, LLC , Series M, A&B Investments, A&B II, LLC and Grace
Pacific LLC entered into a third amendment ("Prudential Amendment") to the
Second Amended and Restated Note Purchase and Private Shelf Agreement, dated as
of December 10, 2015 (as amended), with Prudential Investment Management, Inc.
and certain affiliates thereto, which amends certain covenants, as described
below. All other terms of the Second Amended and Restated Note Purchase and
Private Shelf Agreement, dated as of December 10, 2015 (as amended), remain
substantially unchanged.
AIG Private Shelf Facility Amendment: On August 31, 2021 , the Company, A&B LLC,
Alexander & Baldwin, LLC , Series R, Alexander & Baldwin, LLC , Series T,
Alexander & Baldwin, LLC , Series M, A&B Investments, A&B II, LLC and Grace
Pacific LLC entered into a second amendment ("AIG Amendment") to the Note
Purchase and Private Shelf Agreement, dated as of December 20, 2017 (as
amended), with AIG Asset Management (U.S.), LLC and certain affiliates thereto,
which amends certain covenants, as described below. All other terms of the Note
Purchase and Private Shelf Agreement, dated as of December 20, 2017 (as
amended), remain substantially unchanged.
A&B Revolver, Prudential Amendment and AIG Amendment Changes: The principal amendments to the covenants under the A&B Revolver, the Prudential Amendment and the AIG Amendment are as follows:
•Improvement of the total adjusted asset value and unencumbered income producing assets value through a decrease in the applicable cap rates on commercial real estate investment properties and leased non-agricultural land with improvements thereon: •Commercial real estate investment properties cap rates decreased from 7.25% for all investment properties to 6.50% for retail and office investment properties and 6.00% for industrial investment properties, and, •Leased non-agricultural land with improvements cap rates decreased from 7.50% for all leased non-agricultural land with improvements to 6.50% for leased non-agricultural land with retail and office improvements and 6.00% for leased non-agricultural land with industrial improvements. •Total adjusted asset value and unencumbered income producing assets value has been modified forA&B II, LLC , the direct holding company of Grace Pacific, among other changes and as defined therein. For the periodAugust 31, 2021 throughFebruary 28, 2023 , the book value (net of impairments) of the assets ofA&B II, LLC and its subsidiaries will -------------------------------------------------------------------------------- be used in the unencumbered income producing assets value, which was previously EBITDA generated solely byA&B II, LLC and its subsidiaries for the period of four consecutive fiscal quarters most recently ended with a 16.67% cap rate. AfterFebruary 28, 2023 , Grace Pacific's value will be based on adjusted EBITDA, as defined, with a 16.67% cap rate. •Allows the maximum ratios of total debt to total adjusted asset value and unsecured debt to unencumbered income producing assets value, as defined, to exceed 0.60:1.00 for four consecutive quarters following a Significant Acquisition, provided that the ratio does not exceed 0.65:1.00. A Significant Acquisition is defined as an acquisition of one or more real property assets in a single transaction or a series of related transactions for a purchase price exceeding 10% of total adjusted asset value. •An increase in the maximum ratio of secured debt to total adjusted asset value from 0.25:1.00 to 0.40:1.00. •Establishes the minimum shareholders' equity amount to be$865.6 million plus 75 percent of the net proceeds received from equity issuances afterJune 30, 2021 . •Modification of the minimum unencumbered fixed charge coverage ratio to an unencumbered interest coverage ratio and increases the ratio from 1.50:1.00 to 1.75:1.00. The foregoing description of the terms of the A&B Revolver, Prudential Amendment and AIG Amendment is qualified in its entirety by reference to the A&B Revolver, Prudential Amendment and AIG Amendment, which are filed as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (d) Exhibits
10.1 Third Amended and Restated Credit Agreement by and among
Alexander & B aldwin I n vestments, LLC , A&B II, LLC ,
Grace Pacific LLC, Bank of America N.A., First Hawaiian Bank, Key B ank
National Association , Wells Fargo Bank , NationalAssociation, and other
lenders party thereto, dated August 31 , 2021 .
10.2 Third Amendment to Second Amended and Restated Note Purchase and Private Shelf
Agreement by and among Alexander & Baldwin, Inc. , Alexander & Investment Management, Inc. , and certain affiliates of
Inc., dated August 31 , 2021 .
10.3 Second Amendment to Note Purchase and Private Shelf Agreement by and among
Alexander & Baldwin, Inc. ,Alexander & Baldwin, LLC , AIG
Asset Management
( U.S.), LLC ., and certain affiliates of AIG Asset
Management (
LLC , dated August 31 , 2021 .
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
--------------------------------------------------------------------------------
© Edgar Online, source
