Item 1.01 – Entry into a Material Definitive Agreement
Credit Agreement, Collateral Agreement and Guarantee Agreement
In connection with the acquisition (the “Acquisition”) by American Axle & Manufacturing Holdings, Inc. (“Holdings”) of Metaldyne Performance Group Inc. (“MPG”), on April 6, 2017 American Axle & Manufacturing, Inc. (“AAM”) and Holdings entered into a credit agreement (the “Credit Agreement”), among AAM, as borrower, Holdings, each financial institution party thereto as a lender (the “Lenders”), and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which Holdings and certain of its restricted subsidiaries (including certain subsidiaries of MPG acquired as part of the Acquisition) are required to guarantee the borrowings of AAM thereunder and Holdings, AAM and certain of their restricted subsidiaries are required to pledge their assets (including, without limitation, after-acquired assets), subject to certain exceptions and limitations. In connection with the Credit Agreement, Holdings, AAM and certain of their restricted subsidiaries entered into a Collateral Agreement with JPMorgan Chase Bank, N.A., as collateral agent, and a Guarantee Agreement with JPMorgan Chase Bank, N.A., as administrative agent.
Pursuant to the Credit Agreement, the Lenders agreed to provide a $100 million term loan A facility (the “Term Loan A Facility”), a $1.55 billion term loan B facility (the “Term Loan B Facility”) and a $900 million multi-currency revolving credit facility (the “Revolving Credit Facility”, and together with the Term Loan A Facility and the Term Loan B Facility, the “Credit Facilities”). The proceeds of the Term Loan A Facility and the Term Loan B Facility were used to finance a portion of the consideration for the Acquisition, pay transaction costs, redeem in full MPG Holdco I Inc.’s 7.375% Senior Notes due 2022, and repay the existing indebtedness of AAM under its Amended and Restated Credit Agreement, dated as of January 9, 2004, amended and restated as of September 13, 2013 and as further amended, among AAM, as borrower, Holdings, JPMorgan Chase Bank, N.A. as Administrative Agent, and each financial institution party thereto as a lender, as well as existing indebtedness of MPG under its Credit Agreement, dated as of October 20, 2014 and as amended as of May 8, 2015, among MPG Holdco I Inc., as guarantor, MPG, the subsidiary guarantors party thereto, each financial institution party thereto as a lender, and Goldman Sachs Bank USA, as administrative agent. The proceeds of the Revolving Credit Facility will be used for general corporate purposes.
The Term Loan A Facility and the Revolving Credit Facility will mature on April 6, 2022, and the Term Loan B Facility will mature on April 6, 2024. Each maturity date may be extended by written request from AAM to the Administrative Agent, to which the applicable lender may agree in its sole discretion. Borrowings under the Credit Facilities bear interest at rates based on the applicable Eurodollar rate or alternate base rate, as AAM may elect, in each case plus an applicable margin determined based on AAM’s total net leverage ratio. The alternate base rate is the greatest of (a) the JPMorgan Chase Bank, N.A. prime rate, (b) the Federal Reserve Bank of New York rate plus 0.50% and (c) the adjusted Eurodollar rate plus 1.00%. The applicable margin for Eurodollar-based loans under the Credit Facilities will be between 1.25% and 2.25% with respect to any loan under the Term Loan A Facility, 2.25% with respect to any loan under the Term Loan B Facility, and between 2.00% and 3.00% with respect to any loan under the Revolving Credit Facility. The applicable margin for loans subject to alternate base rate will be between 0.25% and 1.25% with respect to any loan under the Term Loan A Facility, 1.25% with respect to any loan under the Term Loan B Facility, and between 1.00% and 2.00% with respect to any loan under the Revolving Credit Facility.