Article 1.01. The conclusion of an important definitive agreement.
Amended and updated credit agreement with Bank of America, NA., as administrative agent
At September 13, 2021 (the “Closing Date”), Flowserve Company (the “Company”) has amended and updated its credit agreement (the “Amended and Updated Credit Agreement”) with Bank of America, NA., as administrative agent, and the other lenders (together, the “Lenders”) and the issuers of letters of credit who are parties thereto to (1) keep, of the existing Credit Agreement (as defined below- below), the $ 800.0 million unsecured revolving credit facility (which includes a
$ 750.0 million sub-limit for the issuance of letters of credit and a
$ 30.0 million sub-limit for swing line loans) and the right, subject to certain conditions, including a lender approving such an increase, to increase the amount of this revolving credit facility by an aggregate amount not exceeding
$ 400.0 million and (2) allow up to $ 300 million unsecured term loan facility, a maturity date for revolving and term loans of September 13, 2026
and the ability to make certain adjustments to the commitment fee, interest rate and letter of credit charges otherwise applicable based on the performance of the Company against key performance indicators to be established with respect to concerns some of the Company’s environmental, social and governance objectives.
At the closing date, approximately $ 300.0 million was drawn under the Amended and Restated Credit Agreement to fund, in part, the previously announced repayment of the Company’s 3,500% Senior Notes at maturity September 2022 and 4,000% senior notes at maturity November 2023. At the closing date, the Company had no revolving loans outstanding and had $ 78.0 million letters of credit outstanding under the Company’s then current credit agreement as of July 16, 2019, as amended, between the Company, Bank of America, NA., as administrative agent, lender of lines of credit and issuer of letters of credit, and other lenders and issuers of letters of credit party thereto (the “Existing Credit Agreement”). As part of the amendment and update of the existing credit agreement at the closing date, the Company’s outstanding letters of credit under the existing credit agreement were transferred to be under the amended and updated credit agreement. Future drawdowns under the Amended and Restated Credit Facility will be subject to various conditions, including the absence of default under the Amended and Restated Credit Agreement.
The annual interest rates applicable to the Revolving Credit Facility under the Amended and Restated Credit Agreement (except for swing line loans) will be LIBOR (for dollar loans) , SONIA (in relation to loans in pounds sterling), EURIBOR (in relation to loans in euros) or any other rate determined by the Administrative Agent (in relation to loans in currencies approved in accordance with the terms of the Credit Agreement as amended and set (collectively, the “Relevant Rate”) increased from 1.00% to 1.750% depending on the rating of the Company’s debt by either other
Moody’s Investors Service, Inc. (“Moody’s”) or Standard & Poor’s Financial Services LLC (“S&P”), or, at the Company’s option, the Base Rate (as defined in the Credit Agreement) increased from 0.000% to 0.750% depending on the Company’s debt rating by Moody’s or S&P. The annual interest rates applicable to the Term Loan Facility under the Amended and Restated Credit Agreement will be LIBOR plus 0.875% to 1.625% depending on the Company’s debt rating by Moody’s or S&P, or, at the option of the Company, the Base Rate (as defined in the credit agreement) increased from 0.000% to 0.625% depending on the Company’s debt rating by Moody’s or S&P. On the closing date, the initial interest rate on the revolving credit facility under the Amended and Restated Credit Agreement was the relevant rate plus 1.375% for loans at the relevant rate and the rate of base plus 0.375% for prime rate loans. , and the initial interest rate on the term loan facility under the Amended and Restated Credit Agreement was LIBOR plus 1.250% in the case of LIBOR loans and the base rate plus 0.250% in the case of LIBOR loans. prime rate loans. From the Closing Date, a Commitment Fee will be payable quarterly in arrears on the unused daily portions of the Revolving Facility under the Amended and Restated Credit Agreement. The commitment fee will be between 0.080% and 0.250% of the unused amounts under the revolving credit facility depending on the Company’s debt rating by Moody’s or S&P.
The credit agreement includes customary representations and warranties, positive and negative covenants and events of default, including the maintenance of consolidated net leverage ratios and interest coverage. If an event of default occurs and continues, lenders have the right to declare all outstanding loans immediately due and payable.
The foregoing description of the Amended and Restated Credit Agreement does not purport to be a complete statement of the rights and obligations of the parties under the Amended and Restated Credit Agreement and the transactions contemplated therein, and is qualified as in its entirety by reference to the Amended and Restated Credit Agreement. Updated Credit Agreement, a copy of which is attached as Exhibit 10.1 to this current report on Form 8-K.
Article 1.02. Termination of an important definitive agreement.
The information required by this section 1.02 is incorporated herein by reference to the information set forth above in section 1.01 regarding the termination of the existing credit agreement.
Article 2.03. Creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant.
The information required by this section 2.03 is incorporated herein by reference to the information contained in section 1.01 above.
Article 9.01. Financial statements and supporting documents.
Exhibit No. Description
10.1 Amended and Restated Credit Agreement, dated as of
September 13, 2021, among Flowserve Corporation, Bank of America,
N.A., as swing line lender, a letter of credit issuer and
administrative agent, and the other lenders and swing line
lenders referred to therein.
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