Business Context and Reporting Period
Company: Dana Holding Corporation (DANA Inc)
Filing Type: Form 8-K (Current Report)
Date of Report: June 20, 2013
Event: Entry into a Material Definitive Agreement regarding a new revolving credit facility.
Key Financial Metrics and Debt Structure
This filing details the restructuring of the company's asset-based lending (ABL) facility rather than reporting operational financial results.
- Facility Amount: $500,000,000 aggregate availability.
- Term: Five years.
- Interest Rates (Floating):
- Eurodollar Rate + Margin: 1.50% (Availability > $350M), 1.75% ($150M - $350M), or 2.00% (Availability ≤ $150M).
- Base Rate + Margin: 0.50% (Availability > $350M), 0.75% ($150M - $350M), or 1.00% (Availability ≤ $150M).
- Commitment Fees: 0.375% per annum if average daily unused portion is ≥ 50% of commitment; 0.25% per annum if < 50%.
- Collateral: First-priority liens on inventory, accounts receivable, security accounts, investment property, and deposit accounts.
Material Changes Versus Prior Period
The new Second Amended and Restated Revolving Credit and Guaranty Agreement replaces Dana's previous $500,000,000 asset-based revolving credit facility. The aggregate availability remains at $500,000,000, but the terms, interest rate margins, and fee structures have been updated.
Guidance, Covenants, and Risks
Covenants: The facility does not contain standard financial maintenance covenants. A minimum fixed charge coverage ratio of 1.0 to 1.0 applies only if Dana fails to maintain Availability of at least $62,500,000 for five consecutive business days or $50,000,000 for one business day.
Risks and Contingencies:
- Lenders may accelerate loan payments and charge default interest rates for breaches of covenants.
- Availability is subject to a borrowing base based on eligible accounts receivable and inventory.
- Second-priority liens may be required on certain non-ABL collateral if first-priority liens are granted to other lenders.
Management Commentary: The filing text does not provide specific management commentary or forward-looking guidance beyond the terms of the agreement.
Investor Verification Checklist
- Verify the current "Availability" under the borrowing base to determine the applicable interest rate margin and commitment fee tier.
- Review the full text of Exhibit 10.1 (Credit Agreement) and Exhibit 10.2 (Security Agreement) for specific definitions of EBITDA and restricted payments.
- Monitor the company's inventory and accounts receivable levels, as these directly limit borrowing capacity.
- Confirm whether the company has triggered the contingent fixed charge coverage ratio covenant.