OneWater Marine Inc. — Form 8-K Summary
Report date: July 22, 2020; filed July 24, 2020. The filing reports a refinancing transaction and related amendments to the company’s inventory financing arrangements. It does not provide operating results for a quarterly or annual reporting period.
Business Context and Transaction
OneWater Marine Inc. entered into a new Credit Agreement through its operating subsidiaries, with Truist Bank serving as administrative and collateral agent. The transaction refinanced the company’s former credit facility and provided additional liquidity for working capital and general corporate purposes.
Key Financial Terms and Liquidity
| Item | Terms |
|---|---|
| Revolving credit facility | $30.0 million commitment, including up to $5.0 million of swingline loans and $5.0 million of letters of credit; no borrowings were outstanding at closing. |
| Term loan | $80.0 million advanced in full on July 22, 2020. |
| Potential facility increase | Revolving and term loan commitments may be increased by up to $50.0 million in aggregate, subject to conditions. |
| Maturity | Both facilities mature on July 22, 2025. Term loan installments begin March 31, 2021, with the remaining balance due at maturity. |
| Interest | Borrowers may elect a base-rate option with a margin of up to 2.00% or an Adjusted LIBO Rate option with a margin of up to 3.00%. Margins may step down based on consolidated leverage ratios. |
| Collateral | Secured by specified real and personal property, including certain equity interests; inventory and certain other assets financed under the inventory facility are excluded. |
Term loan proceeds and cash on the operating company’s balance sheet were used to repay the former credit facility, pay related fees and expenses, and fund working capital and general corporate purposes. The filing does not provide revenue, net income, cash flow, margin, or balance-sheet liquidity figures.
Material Changes Versus the Prior Comparable Financing
- The new facility replaced the former credit facility and resulted in the repayment of $30.8 million, inclusive of principal, interest, and fees.
- The former facility had a $110.0 million aggregate principal capacity, consisting of a $100.0 million term loan, a $10.0 million revolving facility, and an uncommitted accordion of up to $20.0 million.
- The former facility was scheduled to mature February 11, 2025; the replacement facilities mature July 22, 2025.
- The former facility carried interest margins of up to 7.00% over LIBOR or up to 6.00% over the base rate, compared with maximum margins of 3.00% and 2.00%, respectively, under the new facility.
- The inventory financing agreement was amended to accommodate the refinancing, permit up to $160.0 million of indebtedness under the Credit Agreement structure, and permit specified transaction costs.
Covenants, Risks, and Unusual Items
- The Credit Agreement requires compliance with a minimum fixed charge coverage ratio and maximum consolidated leverage ratio.
- Restrictions apply to additional debt, liens, investments, restricted payments, mergers, asset transfers, amendments to certain agreements, and affiliate transactions.
- Mandatory prepayments may be required after specified asset sales, casualty events, additional debt incurrence, and, beginning with fiscal 2021, based on excess cash flow and leverage.
- Events of default include payment defaults, covenant breaches, specified insolvency proceedings, inability to pay debts, and a change in control.
- The refinancing creates a new direct financial obligation and subjects the company to secured debt service, covenant, refinancing, and interest-rate risks.
Facts Investors Should Verify
- Outstanding term loan balance, required amortization schedule, and applicable interest margins.
- Availability and utilization of the $30.0 million revolving facility and any letters of credit.
- Compliance with fixed charge coverage and leverage covenants in subsequent filings.
- Inventory financing balances and the combined debt capacity permitted under the amended arrangements.
- Whether excess-cash-flow or other mandatory prepayments become due beginning with fiscal year 2021.
- The filing’s effect on future interest expense, liquidity, and collateral encumbrances.