Mayville Engineering Company, Inc. — Form 8-K Summary
Filing date: June 28, 2023; signed June 29, 2023. The filing reports entry into an amended and restated credit agreement and creation of related financial obligations. No quarterly or annual operating results are reported.
Material Financing Terms
- Revolving credit facility increased to $250 million.
- Maturity extended to June 28, 2028.
- LIBOR replaced with SOFR, including a 0.10% per annum adjustment.
- Interest-rate margin ranges from 1.25% to 2.75%, based on the company’s Consolidated Total Net Leverage Ratio.
- Incremental facility capacity increased to the greater of $100 million and 125% of trailing twelve-month Consolidated EBITDA.
- Maximum permitted Consolidated Total Leverage Ratio increased to 3.50 to 1.00, with potential increases to 4.00 to 1.00 for four consecutive fiscal quarters following certain material acquisitions, on up to two occasions.
- Obligations are secured by substantially all personal property assets of the company and subsidiary guarantors.
Use of Proceeds and Business Context
Proceeds are intended to finance the previously announced acquisition of Mid-States Aluminum and for general corporate purposes. The agreement replaces and amends the company’s prior September 26, 2019 credit agreement, as previously amended.
Changes Versus the Prior Agreement
- Greater revolving borrowing capacity and incremental facility availability.
- Longer revolving facility maturity.
- Transition from LIBOR to SOFR.
- Revised leverage-based pricing and increased permitted leverage limits, including acquisition-related flexibility.
- Covenants remain substantially similar, subject to these and other changes in the full agreement.
Financial Metrics, Liquidity, and Outlook
The filing does not provide revenue, profit, cash flow, margins, existing debt balances, drawn amounts, unused availability, or other operating financial metrics. It also provides no formal earnings guidance or quantified outlook. The expanded facility is expected to support the Mid-States Aluminum acquisition and general corporate needs.
Risks and Unusual Items
- The credit facility is secured by substantially all personal property assets of the company and guarantors.
- Borrowing costs are subject to SOFR and leverage-based pricing, creating exposure to interest-rate and leverage changes.
- Higher permitted leverage associated with acquisitions may increase financial risk and debt-service requirements.
- Certain lenders and affiliates have provided, and may provide, banking and advisory services to the company for customary fees.
Investor Verification Items
- Review the full Amended and Restated Credit Agreement filed as Exhibit 10 for detailed covenants, borrowing conditions, events of default, fees, and collateral provisions.
- Verify the amount drawn under the facility and remaining borrowing availability in subsequent financial statements.
- Assess the financing impact and purchase accounting for the Mid-States Aluminum acquisition.
- Monitor leverage ratios, interest expense, SOFR movements, and compliance with financial covenants.