Attached files
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| EX-10.1 - U.S. CONCRETE, INC. | v191632_ex10-1.htm |
UNITED
STATES
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
Date
of Report (Date of earliest event reported) July 27, 2010
U.S.
CONCRETE, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
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000-26025
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76-0586680
|
||
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
No.)
|
2925
Briarpark, Suite 1050, Houston, Texas 77042
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (713) 499-6200
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))
Item
1.01 Entry into a Material Definitive Agreement.
On July
27, 2010, U.S. Concrete, Inc. (the “Company”) entered into a Commitment Letter
(the “Commitment Letter”) among the Company, JPMorgan Securities Inc., JPMorgan
Chase Bank, N.A. and Wells Fargo Capital Finance, LLC (collectively, the
“Commitment Parties”) pursuant to which the Commitment Parties have committed to
provide 100% of a $75,000,000 senior secured asset based revolving credit
facility (the “Facility”), subject to the satisfaction or waiver of the
conditions set forth in the Commitment Letter.
As
disclosed in our Current Report on Form 8-K filed April 29, 2010, the Company
and its affiliated debtors and debtors-in-possession (the “Debtors”) are each
subject to a voluntary case (the “Cases”) under chapter 11 of title 11 of the
United States Code, in the United States Bankruptcy Court (the “Bankruptcy
Court”) for the District of Delaware. The Debtors will be reorganized
pursuant to a joint plan of reorganization, dated as of June 2, 2010 (the
“Plan”).
The terms
of the Facility will be on terms set forth in the Commitment
Letter. Each Commitment Party’s commitment is subject to, among other
things, (1) since May 31, 2010, there not occurring or becoming known to
such Commitment Party any event, development or circumstance that has had or
could reasonably be expected to have a material adverse effect on the business,
operations, property or financial condition of the Company and its subsidiaries,
taken as a whole; (2) such Commitment Party not becoming aware after the
date of the Commitment Letter of any information or other matter (including any
matter relating to financial models and underlying assumptions relating to the
Company’s projections) affecting the Company or its subsidiaries that is
inconsistent in a material and adverse manner with any such information or other
matter disclosed (taken as a whole) to such Commitment Party prior to July 27,
2010 or would
materially impair the syndication of the Facility; (3) the Commitment
Parties’ satisfaction with, and the approval by the Bankruptcy Court, as
necessary, of (a) the Facility and the transactions contemplated thereby
(including the repayment in full of the obligations outstanding under the
Company’s existing Revolving Credit, Term Loan and Guarantee Agreement (as
amended, supplemented or otherwise modified from time to time, the “DIP Credit
Agreement”), dated as of May 3, 2010 among the Company, as borrower, certain
domestic subsidiaries of the Company, as guarantors, the lenders and issuers
party thereto from time to time, and JPMorgan Chase Bank, N.A., as
administrative agent, and all definitive documentation in connection
therewith, (b) all actions to be taken, undertakings to be made, obligations to
be incurred by the Company and all liens to be granted by the Company in
connection with the Facility (all such approvals to be evidenced by the entry of
one or more orders of the Bankruptcy Court reasonably satisfactory in form and
substance to the Commitment Parties), which orders shall, among other things,
approve the payment by the Company of all of the fees required in connection
with the Facility and (c) the Plan; (4) the closing of the Facility on or before
September 27, 2010; (5) the closing of $50 million of convertible secured notes
(the “Notes”) (as disclosed in our Current Report on Form 8-K filed July 20,
2010), before, or concurrently with, the closing of the Facility, (6) minimum
availability under the Facility after giving effect to the loans funded and
letters of credit issued on the closing date of the Facility (the “Closing
Date”) of $25,000,000, (7) delivery by the Company of reasonably satisfactory
appraisals and field examinations, (8) there not having occurred any default or
event of default, (9) the truth and accuracy in all material respects of
representations and warranties, and (9) other
customary closing conditions, including without limitation, executed definitive
documentation, legal opinions and other closing documents reasonably
satisfactory to the Commitment Parties, the payment of fees and expenses, the
receipt of all necessary government and material third party approvals,
financial statements and projections and no material litigation.
2
Up to $30
million of the Facility is available for the issuance of letters of credit, and
any such issuance of letters of credit will reduce the amount available for
loans under the Facility. Advances under the Facility are limited by
a borrowing base of (a) 85% of eligible accounts receivable plus (b) the lesser
of (i) 85% of the appraised net orderly liquidation value of eligible inventory
and (ii) 50% of the eligible inventory plus (c) the lesser of (i)
$15,000,000 and (ii) 85% of the appraised net orderly liquidation value of
eligible trucks plus (d) the difference between (i) 80% of the cost of eligible
trucks and (ii) a percentage (to be mutually determined) of the depreciation
applicable to eligible trucks minus (e) such customary reserves as JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative
Agent”) may establish from time to time in its permitted
discretion. In addition, prior to the delivery of financial
statements for the fiscal quarter ended September 30, 2011, there will be an
availability reserve (the “Availability Reserve”) of $15,000,000 and after such
date, unless the fixed charge coverage ratio for any trailing twelve month
period is greater than or equal to 1.00:1.00, there will be an Availability
Reserve of $15,000,000, to be increased monthly by $1,000,000 up to a maximum of
$20,000,000.
Proceeds
of the loans shall be used (i) for operating expenses, working capital and other
general corporate purposes of the Company and its subsidiaries, (ii) to pay
transaction costs, fees and expenses in connection with the Facility, the Plan
and the transactions contemplated thereby and (iii) on the Closing Date, to
repay in full the obligations outstanding under the DIP Credit
Agreement.
At the
Company’s option, loans may be maintained from time to time at the
Eurodollar-based rate (“LIBOR”) or the applicable domestic rate (“CB Floating
Rate”) which shall be the greater of (x) the interest rate per annum publicly
announced from time to time by the Administrative Agent as its prime rate and
(y) the interest rate per annum equal to the sum of 1.0% per annum plus the
adjusted LIBOR rate for a one month interest period. The applicable margin on
loans is 2.75% in the case of loans bearing interest at the CB Floating Rate and
3.75% in the case of loans bearing interest at the LIBOR rate. Issued and
outstanding letters of credit are subject to a fee equal to the applicable
margin then in effect for LIBOR loans, a fronting fee equal to 0.20% per annum
on the stated amount of such letter of credit, and customary charges associated
with the issuance and administration of letters of credit. The
Company also will pay a commitment fee on undrawn amounts under the Facility in
an amount equal to 0.75% per annum. Upon any event of default, at the
direction of the required lenders under the Facility, all outstanding loans and
the amount of all other obligations owing under the Facility will bear interest
at a rate per annum equal to 2.0% plus the rate otherwise applicable to such
loans or other obligations.
The
Facility will mature four years after the Closing Date (the “Maturity
Date”). Loans are due and payable in full on the Maturity
Date. Outstanding borrowings under the Facility are prepayable, and
the commitments under the Facility may be permanently reduced, without penalty.
There are mandatory prepayments of principal in connection with (i) the
incurrence of certain indebtedness and certain equity issuances and (ii) certain
non-ordinary course asset sales or other dispositions (including as a result of
casualty or condemnation), with customary reinvestment provisions for asset
sales, casualty and condemnation. Mandatory prepayments are applied
to repay outstanding loans without a corresponding permanent reduction in
commitments under the Facility.
The
definitive documentation governing the Facility will require the Company and its
subsidiaries to comply with customary affirmative and negative
covenants. In addition, beginning with the fiscal month in which the
Availability Reserve is eliminated and with respect to each fiscal month
thereafter, at any time that availability under the Facility is less than
$15,000,000, the Company must maintain a fixed charge coverage ratio of at least
1.0:1.0 until availability is greater than or equal to $15,000,000 for a period
of 30 consecutive days.
3
The
definitive documentation will contain customary events of default.
All
obligations under the Facility will be (a) unconditionally guaranteed by the all
of the Company’s existing and future U.S. subsidiaries (other than the Michigan
joint venture and its direct and indirect subsidiaries) (the “Guarantors”) and
(b) are secured by (i) a first priority perfected lien (subject to certain
exceptions) in substantially all of the Company’s and Guarantors’ present and
after acquired inventory, accounts receivable, specified mixer trucks, deposit
accounts, securities accounts, general intangibles (other than intellectual
property and equity in subsidiaries), instruments and documents and all proceeds
and products of the foregoing and (ii) a perfected second priority
lien (subject to certain exceptions) on substantially all other
present and after acquired property (including, without limitation, material
owned real estate).
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
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Exhibit
No.
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Exhibit
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10.1
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Commitment
Letter dated as of July 27, 2010, by and among U.S. Concrete, Inc.,
JPMorgan Securities Inc., JPMorgan Chase Bank, N.A. and Wells Fargo
Capital Finance, LLC.
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4
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 thereunto
duly authorized.
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U.S.
CONCRETE, INC.
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Date:
July 27, 2010
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By:
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/s/ Michael W.
Harlan
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Michael
W. Harlan
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President
and Chief Executive
Officer
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