Business Context and Reporting Period
This Form 8-K Current Report was filed by NCS Multistage Holdings, Inc. on May 1, 2019. The filing discloses the entry into a Second Amended and Restated Credit Agreement, replacing the prior credit facility in its entirety. The Company is an emerging growth company incorporated in Delaware.
Key Financial Metrics and Debt Structure
The filing details a new Senior Secured Credit Facility with the following terms:
- Total Facility Size: $75.0 million aggregate principal amount.
- U.S. Facility: $50.0 million senior secured revolving credit facility (includes up to $5.0 million for letters of credit and $5.0 million for swingline loans).
- Canadian Facility: $25.0 million senior secured revolving credit facility.
- Maturity Date: May 1, 2023.
- Interest Rates: Applicable margins range between 2.75% and 3.5% over base rates (Adjusted Base Rate, Eurocurrency Rate, or Canadian Base Rates), depending on the Company's leverage ratio.
- Collateral: Secured by substantially all assets of the Parent Guarantors, U.S. Borrower, Canadian Borrower, and subsidiary guarantors.
The filing text does not provide current revenue, profit, cash flow, or existing debt balances as of the reporting date.
Material Changes Versus Prior Period
The primary material change is the amendment and restatement of the prior credit agreement. The new agreement introduces specific financial covenants effective for the fiscal quarter ending June 30, 2019:
- Maximum Leverage Ratio: 2.50 to 1.00.
- Interest Coverage Ratio: Not more than 2.75 to 1.00.
- Asset Coverage Ratios: If the leverage ratio exceeds 2.00 to 1.00 and there are outstanding borrowings, the Company must maintain a Canadian asset coverage ratio and a U.S. asset coverage ratio of at least 1.00 to 1.00.
Guidance, Risks, and Covenants
The Credit Agreement includes customary affirmative and negative covenants restricting liens, indebtedness, investments, dividends, and restricted payments. Events of default allow lenders to declare all outstanding borrowings immediately due and payable, terminate commitments, and proceed against collateral. The filing does not contain forward-looking guidance on revenue or earnings, nor does it disclose specific contingencies beyond the standard terms of the credit agreement.
Investor Verification Checklist
- Verify the Company's current leverage ratio to ensure compliance with the new 2.50 to 1.00 maximum threshold starting June 30, 2019.
- Confirm the Company's interest coverage ratio meets the new requirement of not exceeding 2.75 to 1.00.
- Review the full text of Exhibit 10.1 (Amended and Restated Credit Agreement) for specific definitions of "Adjusted Base Rate" and "Eurocurrency Rate" applicable to the Company's current borrowing profile.
- Assess the impact of the new asset coverage ratio tests if the Company's leverage ratio exceeds 2.00 to 1.00.