Business Context and Reporting Period
Company: Matson, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 1, 2015
Event: Entry into a Material Definitive Agreement regarding the issuance of senior unsecured notes.
Key Financial Metrics and Transaction Details
- Debt Issuance: $75 million in 30-year senior unsecured notes (the "2015 Notes").
- Interest Rate: 3.92% payable semi-annually.
- Weighted Average Life: Approximately 13 years.
- Use of Proceeds: General corporate purposes, specifically including paying down the revolving credit facility.
- Amortization Schedule:
- 2017–2019: Approximately $1.8 million annually.
- 2020–2026: Between $1.3 million and $8.0 million annually.
- 2027 and thereafter: Approximately $1.5 million annually.
- Guarantors: Matson Navigation Company, Inc., and certain other subsidiaries.
Material Changes and Covenants
The filing details the terms of the 2015 Note Purchase Agreement and a First Amendment extending issuance and maturity dates to October 1 of applicable years. Key financial covenants include:
- Debt to EBITDA: Must not exceed 3.25 to 1.00 for any fiscal four-quarter period.
- EBITDA to Interest Expense: Must not be less than 3.50 to 1.00 for any fiscal four-quarter period.
- Priority Debt Limits:
- Total Priority Debt cannot exceed 20% of Consolidated Tangible Assets (reducing to 17.5% by December 31, 2017, or upon certain events).
- Non-Title XI Priority Debt cannot exceed 10% of Consolidated Tangible Assets.
- Prepayment: Permitted at par plus a yield maintenance premium.
Guidance, Outlook, and Risks
The filing does not provide specific revenue guidance, profit outlook, or management commentary on future operational performance. The primary risk disclosed relates to compliance with the new debt covenants and the obligation to make scheduled principal and interest payments. The filing incorporates a press release (Exhibit 99.1) for additional disclosure.
Investor Verification Checklist
- Verify the exact impact of the $75 million issuance on the company's current revolving credit facility balance.
- Review the full text of the First Amendment to the Note Purchase Agreement (Exhibit 10.1) for specific definitions of "Priority Debt" and "Consolidated Tangible Assets."
- Confirm the company's current Debt-to-EBITDA and EBITDA-to-Interest ratios to assess immediate covenant headroom.
- Check the attached press release (Exhibit 99.1) for any additional strategic context regarding the refinancing.