Item 1.01. Entry into a Definitive Material Agreement
On December 17, 2021, CECO Environmental Corp. (the "Company") entered into
Amendment No. 2 to Second Amended and Restated Credit Agreement, among the
Company, the lenders party thereto and Bank of America, N.A., as administrative
agent (the "Amendment"). The Amendment amends the Company's existing Second
Amended and Restated Credit Agreement, dated June 11, 2019, among the Company,
the lenders from time to time party thereto, Bank of America, N.A., as
administrative agent, and the other parties from time to time party thereto (as
previously amended, the "Existing Credit Agreement" and the Existing Credit
Agreement as amended by the Amendment, the "Amended Credit Agreement").
The Amendment, which includes customary representations and warranties, amends
the Existing Credit Agreement to, among other things, (i) extend the maturity
date of the loans and commitments thereunder from June 11, 2024 to December 17,
2026, (ii) modify certain negative covenants to provide additional operational
flexibility, (iii) modify the definition of Consolidated EBITDA to include an
additional addback related to a contemplated investment, (iv) modify the
consolidated net leverage ratio financial covenant to require a consolidated net
leverage ratio of (A) 3.75:1.00 or less for fiscal quarters ending prior to
December 31, 2023 and (B) 3.50:1.00 or less for fiscal quarters ending on or
after December 31, 2023 and (v) incorporate new benchmark interest rates to
replace the LIBOR interest rate benchmark.
Under the Amended Credit Agreement, loans will accrue interest at a rate equal
to (i) an applicable margin plus (ii) (a) with respect to U.S. dollar
denominated loans, either Term SOFR (as defined in the Amended Credit
Agreement), Daily Simple SOFR (as defined in the Amended Credit Agreement) or
Base Rate (as defined in the Amended Credit Agreement), in each case, plus an
applicable adjustment, (b) with respect to Sterling denominated loans, SONIA (as
defined in the Amended Credit Agreement) plus an applicable adjustment, (c) with
respect to Euro denominated loans, EURIBOR (as defined in the Amended Credit
Agreement) and (d) with respect to Canadian dollar denominated loans, CDOR (as
defined in the Amended Credit Agreement). The applicable margin for loans
fluctuates based on the Company's consolidated net leverage ratio and ranges
between 1.75% - 2.75% (or, in the case of Base Rate Loans (as defined in the
Amended Credit Agreement), 0.75% - 1.75%).
Certain of the lenders, as well as certain of their respective affiliates, have
performed and may in the future perform for the Company, various commercial
banking, investment banking, lending, underwriting, trust services, financial
advisory and other financial services, for which they have received and may in
the future receive customary fees and expenses.
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