Item 1.01. Entry into a Material Definitive Agreement.
On November 17, 2022, Regal Rexnord Corporation (the "Company") and Land Newco,
Inc. entered into an amendment (the "First Amendment") with the Company's
lenders under the Second Amended and Restated Credit Agreement, dated as of
March 28, 2022 (as amended, the "Credit Agreement"), among the Company, various
subsidiaries of the Company from time to time party thereto, the financial
institutions from time to time party thereto as lenders and JPMorgan Chase Bank,
N.A., as administrative agent. Capitalized terms used but not otherwise defined
herein have the meanings ascribed in the Credit Agreement.
Among other things, as more fully set forth therein, the First Amendment (i)
permits the consummation of the proposed transaction pursuant to the Agreement
and Plan of Merger, among the Company, Aspen Sub, Inc. ("Merger Sub"), a wholly
owned subsidiary of the Company, and Altra Industrial Motion Corp. ("Altra"),
with respect to a merger of Merger Sub with and into Altra with Altra surviving
the merger as a wholly owned subsidiary of the Company (the "Proposed
Transaction") and the incurrence of indebtedness and liens in an aggregate
principal amount not to exceed $4,900,000,000 in connection with the Proposed
Transaction; (ii) establishes incremental term loan commitments of $600,000,000
(the "Incremental Term Loan Commitments"), to be funded in connection with the
closing of the Proposed Transaction, which upon funding will be the same class
of term A-1 loans as under the Credit Agreement; (iii) provides an increase of
$500,000,000 in the aggregate principal amount of the revolving commitments
under the Credit Agreement upon consummation of the Proposed Transaction; (iv)
provides an increase in the maximum leverage ratio (defined as, with certain
adjustments, the ratio of the Company's consolidated funded debt to EBITDA)
permitted as of the last day of any fiscal quarter commencing after the
consummation of the Proposed Transaction to 4.875 to 1.00 with step-downs of
such maximum leverage ratio commencing with the fifth fiscal quarter after the
consummation of the Proposed Transaction and each fiscal quarter thereafter
until returning to a maximum level of 3.75 to 1.00; (v) provides a decrease in
the minimum interest coverage ratio permitted as of the last day of any fiscal
quarter commencing after the consummation of the Proposed Transaction to 2.75 to
1.00 with an increase back to 3.00 to 1.00 after the sixth full fiscal quarter
after the consummation of the Proposed Transaction; (vi) adds an additional
level in the pricing schedule to the extent the funded debt to EBITDA ratio is
greater than 4.25 to 1.00 which will be applicable upon the consummation of the
Proposed Transaction; (vii) amends the synergies and cost-savings EBITDA
add-back to include the pro forma impact of synergies and cost-savings prior to
the consummation of an acquisition, subject to the applicable cap in the Credit
Agreement; (viii) provides an increase to the fixed incremental dollar basket to
reflect the increased size of the Company upon consummation of the Proposed
Transaction; (ix) adds a "most favored lender" provision allowing for the
addition of certain covenants or other provisions related to collateral to the
Credit Agreement to the extent such covenants or other provisions are included
in the definitive agreements entered into with respect to the indebtedness to be
incurred in connection with the Proposed Transaction and (x) adds an event of
default to the extent the intercreditor agreement (if then in effect) ceases to
be a legally valid, binding and enforceable obligation of the Company or any
other loan party to the Credit Agreement.
The effectiveness of the First Amendment automatically reduces to zero the
commitments for the "Backstop Facility" described in the Company's Current
Report on Form 8-K filed on October 27, 2022 (the "Prior Form 8-K"). In
addition, as a result of the First Amendment, the amount of the commitments for
the "Bridge Facility" described in the Prior Form 8-K is reduced on a
dollar-for-dollar basis by the amount of the Incremental Term Loan Commitments.
The summary set forth above is not intended to be complete and is qualified in
its entirety by reference to the full text of the First Amendment attached
hereto as Exhibit 10.1. In the ordinary course of business, certain of the
lenders under the Credit Agreement and their affiliates have provided, and may
in the future provide, investment banking, commercial banking, cash management,
foreign exchange or other financial services to the Company and/or one or more
of its subsidiaries for which they have received, and may in the future receive,
compensation.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure under Item 1.01 of this report is hereby incorporated by
reference.
Item 7.01. Regulation FD Disclosure.
On November 17, 2022, the Company issued a press release announcing the entry
into the First Amendment. The press release is filed as Exhibit 99.1 and is
incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) Not Applicable
(d) Exhibits. The following exhibits are being furnished herewith:
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