Business Context and Reporting Period
Company: The Chefs' Warehouse, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 29, 2018
Event: Entry into a Material Definitive Agreement (Asset Based Loan Facility).
Key Financial Metrics and Debt Structure
This filing details a new credit facility rather than reporting operational financial results (revenue, profit, or cash flow). Key debt metrics include:
- Total Facility Amount: $150,000,000.
- Letters of Credit: Up to $30,000,000 available.
- Swingline Borrowings: Up to $20,000,000 available for short-term needs.
- Expansion Option: Borrowers may request an increase of up to $25,000,000 subject to conditions.
- Maturity Date: June 29, 2023, or 90 days prior to the maturity of the existing term loan, whichever is earlier.
- Interest Rate: Base rate or adjusted LIBO rate plus an applicable margin percentage.
- Collateral: First priority security interest in accounts, inventory, and deposit accounts; second priority interest in other personal property.
Material Changes Versus Prior Period
The new Asset Based Loan (ABL) Credit Agreement refinances and replaces the previous Credit Agreement dated June 22, 2016. Key changes include:
- Administrative Agent Change: BMO Harris Bank N.A. replaces JPMorgan Chase Bank N.A. as the administrative agent.
- Structure: The facility is now explicitly structured as an asset-based loan with availability limited to a borrowing base (specified percentages of eligible receivables and inventory).
- Covenants: The agreement introduces a requirement to maintain a minimum consolidated fixed charge coverage ratio if availability falls below a specified threshold.
Guidance, Outlook, and Risks
Management Commentary: The filing does not contain forward-looking guidance on revenue or earnings. It focuses on the restructuring of debt financing.
Risks and Contingencies:
- Borrowing Base Limitations: Actual borrowing availability is not guaranteed at the full $150 million; it is limited by the value of eligible receivables and inventory.
- Covenant Compliance: The company must adhere to affirmative and negative covenants, including the fixed charge coverage ratio trigger.
- Guarantees: The debt is guaranteed by the Company and current/future domestic subsidiaries of CW Parent and Dairyland USA Corporation.
Important Facts for Investor Verification
- Verify the current utilization of the $150 million facility and the specific borrowing base calculation.
- Confirm the maturity date of the existing term loan to determine the exact maturity of this ABL facility.
- Review the specific "applicable margin percentage" for interest rates in the full Credit Agreement (Exhibit 10.1).
- Monitor compliance with the minimum consolidated fixed charge coverage ratio covenant.
- Check for any subsequent amendments regarding the $25 million expansion option.