ARTICLE 2.03. Creation of a Direct Financial Obligation or an Obligation under a
Off-Balance Sheet Arrangement of a Registrant.
As stated earlier, on March 2, 2022, Pentair Commercial Ice LLC (“Pentair Ice”), an indirect wholly-owned subsidiary of Pentair plc (“Pentair”), and
Pentair has entered into a purchase agreement (the “Purchase Agreement”) with Welbilt, Inc. (“Welbilt”), pursuant to which Pentair Ice has agreed to acquire the issued and outstanding equity securities of certain Welbilt subsidiaries and certain other assets, rights and properties, and assume certain liabilities, including Welbilt’s Manitowoc Ice (“Manitowoc Ice”), for an aggregate purchase price of $1.6 billion subject to customary adjustments contemplated by the purchase agreement.
At March 24, 2022for the acquisition of Manitowoc Ice, Pentair
and its subsidiary Pentair Finance S.à rl (“Pentair Finance”) entered into a Loan Agreement (the “Loan Agreement”), between Pentair Finance, as borrower,
Pentairas guarantor, and the party lenders and agents, providing a five-year guarantee $600.0 million senior unsecured term loan facility (the “Term Loan Facility”). From March 24, 2022, no loans were outstanding under the term loan facility. Pentair Finance and Pentair the intention to borrow all $600.0 million
aggregate principal amount available under the term loan facility to fund a portion of the purchase price in the Manitowoc Ice acquisition and to pay the related costs and expenses. Availability of loans under the Term Loan Facility is subject to the satisfaction or waiver of certain conditions, including (i) the closing of the Manitowoc Ice the acquisition substantially at the same time as the financing of these loans, (ii) the absence of a material adverse effect on Manitowoc Ice because March 2, 2022, (iii) the truth and accuracy in all material respects of certain representations and warranties, (iv) the receipt of certain certificates and (v) the receipt of certain financial statements. Start May 30, 2022Pentair Finance will pay a listing fee to each lender under the Loan Agreement of 0.15% per annum on such lender’s actual daily undrawn term loan commitment amount.
The Lenders’ commitment to make the Term Loan Facility available to Pentair Finance expires on the earliest of the following dates: (i) the earlier of: (x) the date on which the purchase is terminated, and (y) five business days after the “Deadline” (as defined in the Purchase Agreement), (ii) the closing of the Manitowoc Ice the acquisition under the purchase agreement with or without the use of the term loan facility, and (iii) the public announcement of the abandonment of the Manitowoc Ice acquired by Pentair or Pentair Finance.
The term loan facility is secured by Pentair. The term loan facility will bear interest at a rate equal to an adjusted base rate, an adjusted forward SOFR or an adjusted simple daily SOFR, plus, in each case, an applicable margin. The applicable margin is based on, at Pentair Finance’s option, Pentair the level of indebtedness or the public credit rating of Pentair Finance. Interest on borrowings is payable quarterly in arrears (for borrowings at the adjusted base rate), monthly in arrears (for borrowings at the adjusted simple daily SOFR), or at the end of the interest period (for SOFR Adjusted Term Loans), unless such interest period is greater than three months, in which case payment is due on each successive date three months after the first day of such period.
With certain exceptions, the term loan facility will mature five years from the date the term loans are made to Pentair Finance. Pentair Finance is authorized to voluntarily prepay loans under the Term Loan Facility, in whole or in part, without penalty or premium, subject to certain minimum amounts and increments and payment of customary break fees. Loans drawn under the Term Loan Facility will be amortized in quarterly installments at an annual rate of 0.0% in the first year, 2.5% in the second year and 5.0% thereafter.
The term loan facility contains financial covenants requiring Pentair not to authorize (i) the ratio of its consolidated debt (net of its consolidated unrestricted cash and cash equivalents) exceeding $5.0 million but without exceeding $250.0 million) to its consolidated net income (excluding, among other things, non-cash gains and losses) before interest, taxes, depreciation, amortization and non-cash stock-based compensation expense (“EBITDA”) on the last day of any period of four consecutive fiscal quarters (each, a “test period”) to exceed 3.75 to 1.00 (or, at Pentair Finance’s option and under certain conditions, 4.25 to 1.00 for four test periods in connection with certain significant acquisitions) and (ii) the ratio of its EBITDA to its consolidated cash interest expense for the same period is less than 3.00 to 1.00. In addition, subject to certain conditions and exceptions, the Term Loan Facility also contains covenants which, among other things, limit
Pentair ability to create liens, merge or consolidate with another person, make acquisitions and incur subsidiary debts.
The term loan facility contains customary events of default. If an Event of Default occurs and continues, the Lenders may terminate any commitment to extend credit under the Term Loan Facility and declare all outstanding amounts under the Term Loan Facility due and payable immediately. . In addition, in the event of an event of default arising from certain events of bankruptcy, insolvency or reorganization, all amounts outstanding under the Term Loan Facility will automatically become due and payable immediately.
The foregoing description of the Loan Agreement is qualified in its entirety by reference to the full text of the Loan Agreement filed as Schedule 4.1 to this Current Report on Form 8-K, which is incorporated by reference herein.
SECTION 9.01. Financial statements and supporting documents.
(a) Financial statements of acquired businesses
(b) Pro forma financial information
(c) Shell Company Transactions
The exhibits listed in the exhibit index below are filed as part of this report.
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