Business Context and Reporting Period
This Form 8-K was filed by Greatbatch, Inc. on May 22, 2007. The filing reports the entry into a new material definitive agreement regarding corporate financing. The registrant is a Delaware corporation with principal executive offices in Clarence, New York.
Key Financial Metrics and Debt Structure
The filing details the establishment of a new credit facility replacing a prior $50 million agreement. Key terms include:
- Total Facility Size: $235 million secured revolving credit facility.
- Subfacilities: Includes a $15 million letter of credit subfacility and a $15 million swingline subfacility.
- Maturity: Initial maturity date of May 22, 2012, with an option to extend to April 1, 2013.
- Expansion Option: Provision to increase borrowing capacity by up to $100 million if fully syndicated.
- Interest Rates: Variable rates based on Prime or LIBOR plus an applicable margin ranging from 0.000% to 2.000% depending on the senior leverage ratio.
- Commitment Fee: Ranges from 0.125% to 0.250%; currently set at 0.125% ($293,750 per annum).
Material Changes Versus Prior Period
The 2007 Credit Agreement replaces the three-year $50 million Second Amended and Restated Credit Agreement dated May 31, 2005. This represents a significant increase in available liquidity, expanding the total credit capacity from $50 million to $235 million, with the potential for an additional $100 million.
Covenants, Restrictions, and Risks
The agreement imposes specific financial covenants and restrictive limitations on corporate actions:
- Financial Covenants:
- Adjusted EBITDA to interest expense ratio must not exceed 3.00 to 1.00.
- Total leverage ratio must not exceed 5.00 to 1.00 (through Sept 29, 2009) and 4.50 to 1.00 (thereafter).
- Restrictive Covenants (Subject to Waiver):
- Acquisitions limited to $100 million (excluding the Enpath Medical, Inc. acquisition).
- Stock repurchases limited to $60 million.
- Payments related to 2003 and 2007 Convertible Subordinated Debentures limited to $53 million.
- Events of Default: Standard provisions allow lenders to declare all obligations immediately due and payable upon an event of default.
The filing text does not provide specific revenue, profit, or cash flow figures for the reporting period, as this is a current report focused on a specific agreement rather than a periodic financial statement.
Investor Verification Checklist
- Verify the current senior leverage ratio to ensure compliance with the 5.00 to 1.00 (or 4.50 to 1.00) total leverage covenant.
- Confirm the status of the previously announced acquisition of Enpath Medical, Inc. to ensure it is excluded from the $100 million acquisition limit.
- Review the company's outstanding convertible debentures to assess the $53 million payment cap.
- Monitor the company's adjusted EBITDA to ensure the interest coverage ratio remains above 3.00 to 1.00.
- Check for any existing defaults or events of default that could trigger immediate repayment of the $235 million facility.