Item 1.01. Entry into a Material Definitive Agreement. Incremental Term Loans OnSeptember 1, 2021 ,Element Solutions Inc (the "Company"),MacDermid, Incorporated ("MacDermid ," and together with the Company, the "Borrowers"), certain subsidiaries of the Company party thereto, Barclays Bank PLC, as collateral agent and administrative agent (the "Agent"), and the lenders party thereto, entered into an incremental term facility (the "Incremental Amendment") to that certain credit agreement, dated as ofJanuary 31, 2019 (as amended and/or supplemented from time to time, the "Credit Agreement"), among the Borrowers, the Agent, the lending institutions from time to time parties thereto and the other entities party thereto. Pursuant to the Incremental Amendment, the Borrowers borrowed newU.S. Dollar term loans (the "New USD Term Loans") in an aggregate principal amount of$400 million through a corresponding increase to the Company's existing$750 million tranche B term loans (the "Existing Term Loans") under the Credit Agreement. The proceeds of the New USD Term Loans were used to finance a portion of the purchase price of the previously-announced acquisition of Coventya Holdings SAS ("Coventya"). The Coventya acquisition closed onSeptember 1, 2021 for a purchase price of approximately €420 million, subject to adjustments. The Credit Agreement, as amended by the Incremental Amendment, provides for senior secured credit facilities in an aggregate principal amount of$1.48 billion , consisting of a revolving credit facility in an aggregate principal amount of$330 million and term loans in an aggregate principal amount of$1.15 billion . Except as set forth in the Incremental Amendment, the New USD Term Loans have identical terms as the Existing Term Loans, including a maturity date ofJanuary 31, 2026 . Certain restricted subsidiaries of the Borrowers acting as guarantors under the Credit Agreement (the "Guarantors") will guarantee the Borrowers' obligations under the New USD Term Loans. The New USD Term Loans will also be secured by the collateral pledged by the Borrowers and the Guarantors under that certain Pledge and Security Agreement, dated as ofJanuary 31, 2019 , among the Borrowers, the Guarantors and the Agent (as amended and/or supplemented from time to time, the "Security Agreement").
Interest Rate
The applicable interest rate for the term loan borrowings under the Credit Agreement was not amended by the Incremental Amendment and remains at (a) a spread of 1.00% per annum for base rate loans and (b) a spread of 2.00% for eurocurrency rate loans, plus, in each case, an additional rate per annum equal to (a) for base rate loans, a base rate determined by reference to the highest of (i) the federal funds effective rate plus 0.50%, (ii) the rate of interest quoted by The Wall Street Journal as the prime rate inthe United States , and (iii) an adjusted one month London Inter-bank Offered Rate ("LIBOR"), plus 1.00%; and (b) for eurocurrency rate loans, an adjusted LIBOR rate determined by reference to the cost of funds for the applicable currency for the interest period relevant to such borrowing, subject to a LIBOR rate floor of 0.0% per annum. The New USD Term Loans will bear interest at the applicable rate for eurocurrency rate loans. Covenants and Events of Default The Credit Agreement also contains customary covenants including limitations on additional indebtedness, dividends and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions and dispositions. Upon the occurrence of an event of default, payment of any outstanding amounts under the Credit Agreement may be accelerated. Borrowings under the Credit Agreement are also subject to mandatory prepayment under certain circumstances, with customary exceptions, from the proceeds of permitted dispositions of assets and from certain insurance and condemnation proceeds. The foregoing descriptions of the Incremental Amendment and the New USD Term Loans do not purport to be complete and are qualified in their entirety by reference to the full text of the Incremental Amendment , a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference. The foregoing descriptions of the Credit Agreement and the Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Credit Agreement , as amended by Amen dment No. 1 , and the Security Agreement , which are attached hereto as Exhibits 10.2, 10.3 and 10.4, respectively, and incorporated herein by reference. Swap Transactions -------------------------------------------------------------------------------- In anticipation of the close of the Incremental Amendment, onAugust 6, 2021 , the Company had entered into swap transactions (the "Swaps") with certain banks included in the syndicate of the New USD Term Loans (the "Hedge Counterparties"). The Swaps, which replaced the forward starting swaps entered into by the Company onJune 29, 2021 , are governed by ISDA Master Agreements with each of the Hedge Counterparties and enable the Company to effectively convert the New USD Term Loans, aU.S. dollar denominated debt obligation, into fixed-rate euro-denominated debt. Under the Swap agreements, the Company is required to make periodic euro-denominated coupon payments to the Hedge Counterparties on an aggregate initial notional amount of approximately €340 million in exchange for periodicU.S. dollar-denominated coupon payments from the Hedge Counterparties on an aggregate initial notional amount of$400 million . Each Swap matures onJanuary 31, 2025 .
Item 2.03. Creation of a Direct Financial Obligation.
The information set forth under Item 1.01 regarding the Incremental Amendment and the Swaps is incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed or furnished herewith: Exhibit Number
Description 10.1 Amendment No.3 to Credit Agreement, dated
alios, the Company,MacDermid , the subsidiaries
of the Company from time to
time parties thereto, the lenders from time to
time parties thereto, and
Barclays Bank PLC, as administrative and collateral agent 10.2 Credit Agreement, dated as ofJanuary 31 ,
2019, by and among, inter alia,
the Company,MacDermid , the subsidiaries of the
borrowers from time to time
parties thereto, the lenders from time to time parties thereto, CS, as syndication agent, and Barclays Bank PLC, as administrative agent and collateral agent (filed as Exhibit 10.1 of
the Company's Current Report on
Form 8-K filed onFebruary 5, 2019 , and incorporated herein by reference) 10.3 Amendment No.1, datedNovember 26, 2019 ,
among, inter alios, the Company,
MacDermid , the subsidiaries of the Company from
time to time parties thereto,
the lenders from time to time parties thereto,
and Barclays Bank PLC, as
administrative and collateral agent (filed as
Exhibit 10.1 of the Company's
Current Report on Form 8-K filed onDecember 3 ,
2019, and incorporated herein
by reference) 10.4 Pledge and Security Agreement, dated as of
Company,MacDermid and the subsidiaries of the
borrowers from time to time
parties thereto in favor of Barclays Bank PLC,
as collateral agent (filed
as Exhibit 10.2 of the Company's Current Report
on Form 8-K filed on February
5, 2019, and incorporated herein by reference) 104 Cover Page Interactive Data File (formatted as Inline XBRL)(furnished only)
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