Item 1.01. Entry into the definitive material agreement.
Second amendment to the credit agreement
On June 21, 2022 (the “Effective Date”), Luna Innovations Incorporateda
Delaware company (the “Company”) has entered into a Second Amendment to the Loan Agreement (the “Second Amendment”) with respect to its Loan Agreement, dated
December 1, 2020 (the “Original Loan Agreement” and as amended by this First Amendment to the Loan Agreement, dated March 10, 2022and the Second Amendment, the “Loan Agreement”) with PNC Bank, National Associationas lender (the “Lender”) and certain of the Company’s national subsidiaries as guarantors, to, among other things, extend the maturity date of the Term Loan and the Revolving Line (each as defined below). below) to June 21, 2027 and increase the total liabilities to the Company.
The loan agreement provides for a $15.0 million revolving credit facility (the “Revolving Line”) and a $20 million term loan facility (the “Term Loan”). On the Effective Date, the Company borrowed the full amount of the Term Loan from the lender pursuant to a term note (the “Term Note”), a portion of the proceeds of which was used to refinance the remaining principal amount of the term loan $12.5 million
in term loans issued under the original loan agreement, and the remainder used to repay approximately $13.7 million of the $15.0 million in outstanding revolving loans under the Revolving Line (the “Revolving Loan”) under a revolving line of credit note (the “Revolving Line of Credit Note”). The Company may repay and re-borrow advances under the revolving line of credit from time to time in accordance with the revolving line of credit note.
The obligations of the Company under the Loan Agreement are secured by a perfected first ranking charge on substantially all of the assets of the Company and the guarantors.
The term loan matures on June 21, 2027extended by December 1, 2023 under the Second Amendment. The term loan is amortized at a rate equal to 10% in the first year, 15% in the second and third years and 20% in the fourth and fifth years, in each case paid on a quarterly basis. Accrued interest is due and payable on the first day of each month and the unpaid principal balance and any accrued but unpaid interest will be due and payable on June 21, 2027. The term loan bears interest at a variable annual rate equal to the sum of (a) the simple daily SOFR (as defined in the term note), plus (b) a SOFR adjustment of ten basis points (0.10 %), plus (c ) an applicable margin. The applicable margin varies from 1.75% to 2.50% per annum, depending on the net leverage ratio (as defined in the loan agreement). The Company may prepay the term loan without penalty or premium.
The renewable line expires on June 21, 2027extended by December 1, 2023 under the Second Amendment. Borrowings under the Revolving Line bear interest at an annual variable rate equal to the sum of (a) Daily Simple SOFR, plus (b) a SOFR adjustment of ten basis points (0.10%), plus (c) an applicable margin. The applicable margin varies from 1.75% to 2.50% per annum, depending on the net leverage ratio. Accrued interest is due and payable on the first day of each month and the outstanding principal balance and any accrued but unpaid interest is due and payable on June 21, 2027. The unused portion of the revolving line generates a fee equal to 0.20% per year multiplied by the quarterly average unused amount.
The Loan Agreement includes a number of affirmative and restrictive covenants applicable to the Company and its subsidiaries, including, among others, financial covenants regarding minimum net leverage and coverage of fixed charges, covenants affirmative regarding the filing of financial statements, payment of taxes and maintaining government compliance and covenants regarding disposals of property, acquisitions, formation of additional debt or liens, investments and transactions with corporations affiliates. The Company is also prohibited from paying dividends or making any other distributions or payments on its share capital, subject to limited exceptions.
The foregoing is only a summary of the material terms of the Second Amendment and does not purport to be complete and is qualified in its entirety by reference to the full text of the Second Amendment, which will be filed as an attachment to the Quarterly Report of the society. on Form 10-Q for the quarter ending
June 30, 2022.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set out in point 1.01 above is incorporated by reference in point 2.03.
© Edgar Online, source Previews