UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 29, 2010
January 29, 2010
PROFESSIONAL VETERINARY PRODUCTS, LTD.
(Exact name of registrant as specified in its charter)
Nebraska | 000-26326 | 37-1119387 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
10077 South 134th Street Omaha, NE (Address of principal executive offices) |
68138 (Zip Code) |
(402) 331-4440
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 | Entry into a Material Definitive Agreement. |
On January 29, 2010, Professional Veterinary Products, Ltd., a Nebraska corporation (the
Company), and its wholly-owned subsidiaries, ProConn, LLC, a Nebraska limited liability company,
and Exact Logistics, LLC, a Nebraska limited liability company, executed a Credit and Security
Agreement dated January 29, 2010 (the Credit Agreement) and related documents (collectively, the
Loan Documents) with Wells Fargo Bank, National
Association (the
Lender). The obligations of the Company and its subsidiaries under the Loan Documents are
joint and several.
The Lender may loan to the Company and its subsidiaries up to forty million dollars
($40,000,000), in accordance with the terms of the revolving note (the Revolving Note), which is
secured by substantially all of the assets of the Company and its
subsidiaries, except for real property owned by the Company. Under the
Revolving Note, the Lender shall provide advances to the Company, which advances may be used as
needed by the Company through the maturity date of January 29, 2013. The initial proceeds of the
revolving loan facility were used to payoff the Companys indebtedness to First National Bank of
Omaha, and the remaining proceeds will be used to provide working capital support.
Interest shall be paid at a variable rate, reset daily, equal to the daily three month London
Interbank Offered Rate (LIBOR) rate plus a margin (the Margin) of either (i) 3.50% or (ii) 3.0%,
if for the Companys fiscal year ending July 31, 2010, the
Company attains a certain debt service coverage ratio and meets
a net income requirement. Upon an
event of default, the Revolving Note shall bear interest at the daily three month LIBOR rate plus
the Margin plus 3.00% per annum.
The
Credit Agreement imposes certain financial covenants, which require
that the Company achieve minimum net income thresholds for designated
periods through and including October 31, 2010.
The Credit
Agreement also requires that the Company maintain, as of its fiscal year ending July
31, 2010, a certain debt service coverage ratio, and that the Company not
incur or contract to incur capital expenditures exceeding a specified
amount during any
fiscal year.
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The loan may be accelerated upon
an event of default. These default provisions include, among other
things, the Companys failure to pay amounts when due and to perform any material condition or to
comply with any material promise or covenant of the Credit Agreement.
Under the Credit Agreement, if the Lender terminates the credit facility during a default
period, or the Company terminates or reduces the credit facility prior to maturity, then the
Company shall pay the Lender as liquidated damages a termination fee in an amount equal to a
percentage of the maximum line amount (or the reduction of the maximum line amount, as the case may
be) calculated as follows: (a) 3.0%, if the termination or reduction occurs on or before January
29, 2011; (b) 2.0%, if the termination or reduction occurs after January 29, 2011, but on or before
January 29, 2012; and (c) 1.0%, if the termination or reduction occurs after January 29, 2012.
The foregoing descriptions of the Loan Documents are qualified in their entirety by reference
to the complete terms and conditions of such documents, which shall be filed as exhibits to the
Companys Form 10-Q for the period ended January 31, 2010.
Item 1.02 | Termination of a Material Definitive Agreement |
The Loan Documents executed with
Wells Fargo Bank, National Association (described in Item 1.01
above) have replaced the Loan Agreement dated November 14, 2006, as amended, with First National
Bank of Omaha (FNB) and related loan documentation (collectively, the FNB Loan Documents).
Under the FNB Loan Documents, the Company and its subsidiaries could borrow funds up to
$42,200,000, which included a $37,500,000 revolving loan facility and a $4,700,000 term loan
facility.
The FNB term note was amortized over a ten year period with a final maturity date of December
1, 2016, and had a fixed interest rate of 7.35% per annum. Until December 1, 2009, the Company
paid interest at a variable rate, reset daily equal to the LIBOR rate plus (i) 1.25% per annum when
the cash flow leverage ratio was less then or equal to 3.00 to 1.00 or (ii) 1.50% per annum when
the cash flow leverage ratio was more than 3.00 to 1.00. From December 1, 2009 through January 29,
2010, interest was paid at the higher of 1.5% plus LIBOR or 5% per annum. The revolving note was
scheduled to terminate on February 1, 2010. On January 29, 2010, the Company repaid all of its
obligations in the amount of $32,874,979 under the FNB Loan Documents, which amount included a
prepayment penalty of $241,757.
The foregoing descriptions of the FNB Loan Documents are qualified in their entirety by
reference to the complete terms and conditions of such documents, which have been filed as
exhibits to the Companys current and periodic reports.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
See the information set forth in Item 1.01 of this Current Report on Form 8-K for a discussion
of the terms of the Credit Agreement and the Loan Documents with Wells Fargo Bank, National
Association.
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SIGNATURE
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.
PROFESSIONAL VETERINARY PRODUCTS, LTD. |
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Date: February 4, 2010 | By: | /s/ Tara Chicatelli | ||
Tara Chicatelli, Chief Financial Officer | ||||
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