Varex Imaging Corp. 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Varex Imaging Corporation on October 3, 2018, covering events occurring on September 28, 2018, and October 3, 2018. The filing details amendments to the Company's existing Credit Agreement with Bank of America, N.A., and a subsequent reduction in credit commitment.
Key Financial Metrics and Debt
- Debt Facility: The Company amended its Credit Agreement dated May 1, 2017.
- Revolving Credit Commitment: Permanently reduced by $50,000,000 effective October 10, 2018, resulting in a new total commitment of $150,000,000.
- Permitted Liens Basket: Increased from $5,000,000 to $15,000,000.
- Financial Covenants: The consolidated senior secured leverage ratio covenant was increased from the date of the Amendment until the fiscal quarter ended September 30, 2019.
- EBITDA Definition: Clarified to expressly exclude non-cash restructuring charges.
- Revenue and Profit: The filing text does not provide specific values for revenue, profit, cash flow, or margins.
Material Changes
The primary material change is the restructuring of the Company's debt facility terms. The Company secured more flexible leverage ratios and a higher threshold for permitted liens. Additionally, the reduction in the revolving credit commitment is expected to lower the fees paid by the Company associated with the unused portion of the facility.
Outlook, Risks, and Management Commentary
The filing does not contain forward-looking guidance, management commentary on future performance, or specific risk factors beyond the standard disclosure of the credit agreement amendment. The changes to the Credit Agreement suggest a strategic adjustment to the Company's capital structure and covenant compliance requirements.
Key Facts for Investor Verification
- Verify the impact of the $50,000,000 reduction in revolving credit on the Company's liquidity and working capital needs.
- Confirm the specific terms of the increased consolidated senior secured leverage ratio covenant.
- Review the full text of Amendment No. 2 (Exhibit 10.1) for details on the updated ERISA provisions and other definitions.
- Assess whether the exclusion of non-cash restructuring charges from Consolidated EBITDA significantly alters covenant compliance calculations.