Mayville Engineering Company, Inc. — Form 8-K Summary
Business context and reporting period
Mayville Engineering Company, Inc. filed a Form 8-K reporting its entry into an Amended and Restated Credit Agreement on September 26, 2019. The report was signed on October 2, 2019. The filing concerns financing arrangements and does not report operating results for a specific quarter or year.
Key financial and financing terms
| Item | Term |
|---|---|
| Revolving credit facility | $200 million |
| Letter of credit sub-facility | Up to $5 million |
| Swingline facility | $20 million |
| Maturity | September 26, 2024 |
| Interest rate | LIBOR plus 1.00%–2.00%, based on the consolidated total leverage ratio |
| Commitment fee | 0.20% annually on the average daily unused revolving commitment |
| Minimum interest coverage ratio | 3.00 to 1.00 |
| Maximum consolidated total leverage ratio | 3.25 to 1.00, subject to increases for certain acquisitions |
The facility is secured by first-priority liens on substantially all of the Company’s personal property. The Company’s direct and indirect subsidiaries provide guarantees secured by substantially all of their personal property. If LIBOR is unavailable or cannot be used, the agreement provides for a base-rate calculation and replacement-rate provisions.
Material changes versus the prior comparable period
The filing does not provide prior-period financial results or a comparison with an earlier credit facility. It reports the execution of an amended and restated credit agreement, but the source text does not clearly describe the specific changes from the prior agreement.
Outlook, risks, contingencies, and unusual items
- The agreement contains customary restrictions on additional debt, liens, investments, mergers, asset dispositions, dividends, affiliate transactions, sale-leasebacks, and capital expenditures.
- Events of default include payment or covenant defaults, bankruptcy, cross-defaults, certain ERISA events, material judgments, failure to maintain subsidiary guarantees, and a change in control.
- A change in control may occur if a person or group other than the ESOP controls more than 35% of the equity, the board is no longer majority continuing directors, or the ESOP ceases to own more than 50% of voting stock.
- Upon an event of default, the administrative agent may accelerate amounts owed and terminate the facility, among other remedies.
- The filing does not provide revenue, profit, cash flow, margin, drawn debt, liquidity availability, or management operating guidance.
- Lenders and their affiliates have provided, and may provide, other services to the Company for customary fees.
Facts investors should verify
- Outstanding borrowings and remaining availability under the $200 million facility.
- Compliance with the 3.00-to-1.00 interest coverage and 3.25-to-1.00 leverage covenants.
- The impact of the facility’s security interests and subsidiary guarantees on creditor priority.
- Any changes from the previous credit agreement, including pricing, borrowing base terms, or covenant thresholds.
- Exposure to LIBOR transition and the replacement-rate provisions.
- Whether the Company has incurred commitment fees, letter-of-credit fees, or other financing costs.