Clean Harbors Inc.
07/02/2024 | Press release | Distributed by Public on 07/02/2024 13:02
Material Agreement Form 8 K
Item 1.01 Entry into a Material Definitive Agreement.
On June 28, 2024, Clean Harbors, Inc. (the "Company") and one of the Company's Canadian subsidiaries (the "Canadian Borrower") entered into a seventh amended and restated credit agreement (the "Amended Credit Agreement") with Bank of America, N.A. ("BofA"), as administrative agent (the "Agent"), and the lenders party to the Amended Credit Agreement. The Amended Credit Agreement amends and restates the sixth amended and restated credit agreement dated as of October 28, 2020, as previously amended (the "Prior Credit Agreement"), among the Company, the Canadian Borrower, BofA, as Agent, and the lenders party thereto. Upon the closing of the Amended Credit Agreement, there were no loans outstanding under the Prior Credit Agreement, but there were $136.4 million of outstanding letters of credit which will continue to remain outstanding under the Amended Credit Agreement.
The Amended Credit Agreement provides for an increased revolving credit facility in a maximum amount of $600.0 million. Under the facility the Company has the right to obtain revolving loans and letters of credit for a combined maximum of up to $550.0 million (with a sub-limit of $250.0 million for letters of credit) and the Canadian Borrower has the right to obtain revolving loans and letters of credit for a combined maximum of up to $50.0 million (with a sub-limit for letters of credit equal to lesser of (i) $75.0 million and (ii) the then combined maximum for loans and letters of credit available to the Canadian Borrower). Availability under the U.S. line is subject to a borrowing base basically comprised of 85% of the eligible accounts receivable of the Company and its U.S. subsidiaries plus 100% of cash deposited in a controlled account with the Agent, and availability under the Canadian line is subject to a borrowing base basically comprised of 85% of the eligible accounts receivable of the Company's Canadian subsidiaries plus 100% of cash deposited in a controlled account with the Agent's Canadian affiliate. Subject to certain conditions, the facility will expire on June 28, 2029.
Borrowings by the Company under the revolving credit facility will bear interest at a rate of, at the Company's option, either (i) "Term SOFR" (as defined in the Agreement based primarily upon the secured overnight financing rate administered by the Federal Reserve Bank of New York ("SOFR")), plus 1.5% per annum, or (ii) the U.S. Base Rate (as defined), plus 0.5% per annum, and borrowings by the Canadian Borrower will bear interest, at the Company's option, at either (i) "Term CORRA" (as defined based primarily upon the Canadian overnight repo rate average administered and published by the Bank of Canada ("CORRA")), plus 1.5% per annum, (ii) the "Canadian Prime Rate" (as defined), plus 0.5% per annum, or (iii) the "Canadian Base Rate" (as defined), plus 0.5% per annum. There is also an unused line fee, calculated on the then unused portion of the lenders' $600.0 million maximum commitments, ranging from 0.25% to 0.375% per annum of the unused commitments. For outstanding letters of credit, the Company will pay to the lenders a fee equal to the 1.5% per annum margin for Term SOFR Loans or Term CORRA Loans described above, and to the issuing banks a standard fronting fee and customary fees and charges in connection with all amendments, extensions, draws and other actions with respect to letters of credit. In the event that Term SOFR or Term CORRA ceases to be available during the term of the revolving credit facility, the Amended Credit Agreement provides procedures to determine successor rates.
The Company's obligations under the revolving credit facility (including revolving loans and reimbursement obligations for outstanding letters of credit) are guaranteed by substantially all of the Company's U.S. subsidiaries and secured by a first lien on the Company's and its U.S. subsidiaries' accounts receivable. The Canadian Borrower's obligations under the facility are guaranteed by substantially all of the Company's Canadian subsidiaries and secured by a first lien on the accounts receivable of the Canadian subsidiaries. The Company and its U.S. subsidiaries guarantee the obligations of the Canadian subsidiaries under the facility, but the Canadian subsidiaries do not guarantee and are not otherwise responsible for the obligations of the Company and its U.S. subsidiaries.
Under the Amended Credit Agreement, the Agent would have the right to exercise dominion over the Company's and its subsidiaries' cash (to the extent such cash represents the proceeds of accounts receivable) if the Company's Liquidity for five consecutive days is less than the greater of (i) $45.0 million and (ii) 10.0% of the Line Cap. "Liquidity" is defined as the sum of (a) the Company's then availability under the facility and (b) the Canadian
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Borrower's then availability under the facility, and "Line Cap" is defined as the lesser of (a) the aggregate borrowing bases of the Company and its U.S. and Canadian subsidiaries and (b) the aggregate commitments of the lenders under the facility. The Amended Credit Agreement contains covenants restricting the Company's future ability to (a) incur debt other than under the revolving facility or in certain other permitted forms and amounts and (b) make certain types of acquisitions, debt prepayments, investments and distributions if Liquidity (on a pro forma basis after giving effect to such events) is less than 17.5% or 15.0% (depending upon the type of restricted event) of the lenders' aggregate commitments or (ii) 12.5% of such aggregate commitments provided the Company's consolidated fixed charge coverage ratio for the most recently completed four fiscal quarters is equal to or greater than 1.00 to 1.00.
A copy of the Amended Credit Agreement is filed as an exhibit to this report and is incorporated herein by reference. The foregoing description of the principal terms of that agreement is qualified in its entirety by reference to the full text of such agreement.