ROAD Construction Partners
Filed: 25 Jun 21, 4:14pm
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 22, 2021
CONSTRUCTION PARTNERS, INC.
(Exact name of registrant as specified in its charter)
|(State or other jurisdiction|
290 Healthwest Drive, Suite 2
Dothan, Alabama 36303
(Address of principal executive offices) (ZIP Code)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|☐||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|☐||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|☐||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|☐||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading symbol(s)||Name of each exchange|
on which registered
|Class A common stock, $0.001 par value||ROAD||The Nasdaq Stock Market LLC|
|(Nasdaq Global Select Market)|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 1.01. Entry into a Material Definitive Agreement.
On June 24, 2021 (the “Restatement Date”), Construction Partners, Inc. (the “Company”) and each of its wholly owned subsidiaries (collectively, the “Borrowers”) entered into a Second Amended and Restated Credit Agreement with BBVA USA (“BBVA”), as administrative agent, joint lead arranger, sole bookrunner and lender, Regions Bank and BofA Securities, Inc., each as a joint arranger, and certain other lenders party thereto (the “Second Amended and Restated Credit Agreement”), which amended and restated in its entirety the Amended and Restated Credit Agreement, dated as of July 30, 2020, by and among the Company and each of its wholly owned subsidiaries, as borrowers, BBVA USA, as agent, sole lead arranger and sole bookrunner, and certain other lenders party thereto (the “Existing Credit Agreement”).
Among other things, the Second Amended and Restated Credit Agreement provides for (i) a term loan facility in an initial aggregate principal amount of $200,000,000 (the “Term Loan”), the full amount of which was drawn on the Restatement Date, and (ii) a revolving credit facility in an initial aggregate principal amount of $225,000,000, including a $25,000,000 sublimit for the issuance of standby letters of credit (the “Revolving Credit Facility”). The proceeds of the loans advanced under the Second Amended and Restated Credit Agreement will be used for purposes of (a) refinancing indebtedness of the Borrowers under the Existing Credit Agreement, (b) paying fees and expenses incurred in connection with the Second Amended and Restated Credit Agreement and (c) other general corporate purposes of the Borrowers, including permitted acquisitions.
In addition to the advances under the Term Loan and Revolving Credit Facility, the Borrowers may request one or more incremental term loans or an increase in the commitments under the Revolving Credit Facility (in either case, an “Incremental Facility”) in an aggregate principal amount of up to the greater of (i) $120,000,000 and (ii) the amount of the consolidated EBITDA of the Borrowers and their subsidiaries for the immediately preceding four-fiscal-quarter period, on the same terms as the Term Loan or Revolving Facility, as applicable, including pricing, and, in the case of an Incremental Facility that is a term loan (an “Incremental Term Loan”), the then-applicable amortization rate. The availability of one or more Incremental Facilities is subject to the satisfaction of certain conditions, including, among other things, that the Borrowers’ consolidated net leverage ratio may not be greater than 2.75:1.0 on a pro forma basis (assuming that the Incremental Facility is fully drawn and after giving effect to any permitted acquisitions, refinancing of debt or other event giving rise to pro forma adjustments).
All outstanding advances under the Term Loan and Revolving Credit Facility are due and payable in full on June 24, 2026 (the “Maturity Date”). The Term Loan and any Incremental Term Loan will amortize in quarterly installments commencing on September 30, 2021 in an amount, subject, in each case, to adjustments for prior mandatory and voluntary prepayments of principal, equal to: (a) 1.25% of the original principal amount of the Term Loan Facility (and, to the extent any Incremental Term Loans are then outstanding, the original principal amount of such Incremental Term Loans) on September 30, 2021 and continuing on each of the following eleven quarter-end payment dates; (b) 1.875% of the original principal amount of the Term Loan Facility (and, to the extent any Incremental Term Loans are then outstanding, the original principal amount of such Incremental Term Loans) on each of the next seven quarter-end payment dates; and (c) all remaining principal of the Term Loan Facility and all Incremental Term Loans are due on the Maturity Date.
The obligations of the Borrowers under the Second Amended and Restated Credit Agreement and the other loan documents delivered in connection therewith are secured by a first priority security interest in substantially all of the existing and future personal property of the Borrowers and the equity interests of each of the Borrowers (other than the Company) and of their present and future subsidiaries.
The annual interest rates applicable to advances made under the Second Amended and Restated Credit Agreement will be calculated, at the Company’s option, by using either a base rate or LIBOR, in each case plus an applicable margin percentage that corresponds to the Company’s consolidated net leverage ratio. Upon the occurrence of certain triggering events relating to the end of the LIBOR reference rate, the Borrowers and BBVA will select a different benchmark rate to replace LIBOR as the reference rate for interest accruing on certain advances.
The Second Amended and Restated Credit Agreement contains customary representations and warranties and certain covenants that limit (subject to certain exceptions) the ability of the Borrowers to, among other things, (i) incur or guarantee additional indebtedness, (ii) incur or suffer to exist liens securing indebtedness, (iii) make investments, (iv) consolidate, merge or transfer all or substantially all of their assets, (v) sell assets, (vi) pay dividends or other distributions on, or redeem or repurchase, capital stock, (vii) enter into transactions with affiliates, and (viii) enter into operating leases. In addition, the Second Amended and Restated Credit Agreement contains financial covenants that require the Company’s (i) consolidated leverage ratio to be less than certain maximum levels and (ii) fixed charge coverage ratio to exceed certain minimum levels, in each case, as defined and calculated according to the procedures set forth in the Second Amended and Restated Credit Agreement.
The Second Amended and Restated Credit Agreement also contains customary events of default. If such an event of default occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Second Amended and Restated Credit Agreement and actions permitted to be taken by a secured creditor.
The lenders that are parties to the Second Amended and Restated Credit Agreement and their respective affiliates are full-service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage, and other financial and non-financial activities and services. Certain of these financial institutions and their respective affiliates have provided, and may in the future provide, certain of these services to the Borrowers and to persons and entities with relationships with the Borrowers, for which they received or will receive customary fees and expenses.
The foregoing summary of the Second Amended and Restated Credit Agreement is a summary only and does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Second Amended and Restated Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 1.01.
Item 1.02. Termination of a Material Definitive Agreement.
The information set forth above in Item 1.01 of this Current Report on Form 8-K with regard to the Existing Credit Agreement is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above in Item 1.01 of this Current Report on Form 8-K with regard to the Second Amended and Restated Credit Agreement is incorporated herein by reference.
Item 8.01. Other Events
On June 22, 2021, the Company issued a press release announcing its completion of an acquisition transaction. A copy of the press release is furnished as Exhibit 99.1 hereto, and the information contained in Exhibit 99.1 is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Second Amended and Restated Credit Agreement, dated as of June 24, 2021, by and among Construction Partners, Inc. and each of its wholly owned subsidiaries, as borrowers, BBVA USA, as administrative agent, joint lead arranger, sole bookrunner and lender, Regions Bank and BofA Securities, Inc., each as a joint arranger, and certain other lenders party thereto
|104*||Cover Page Interactive Data File (embedded within the Inline XBRL document)|
* Filed herewith.
† Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish to the Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|CONSTRUCTION PARTNERS, INC.|
|Date: June 25, 2021||By:||/s/ R. Alan Palmer|
|R. Alan Palmer|
|Executive Vice President and Chief Financial Officer|