Item 1.01.
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Entry into a Material Definitive Agreement.
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On June 30, 2020, Mayville Engineering Company, Inc. (the Company) entered into an amendment (the Second
Amendment) to the Amended and Restated Credit Agreement, dated as of September 26, 2019, by and among the Company, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent for the
lenders (the Agent), and Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Bookrunner (the Credit Agreement). Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Credit
Agreement.
The Second Amendment provides the Company with temporary relief regarding a financial covenant (the Consolidated Total
Leverage Ratio) for the period from June 30, 2020, through December 31, 2021, or such earlier date as the Company may elect (the Covenant Relief Period) in return for certain increases in interest rates and fees and
restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases.
During
the Covenant Relief Period, the required ceiling on the Companys Consolidated Total Leverage Ratio will be 4.25 to 1 for quarters ending June 30, 2020 through and including December 31, 2020, and will decline in quarterly increments
to 3.25 to 1 for the quarter ending December 31, 2021.
The Applicable Margin for LIBOR borrowing will increase to as much as 2.75%,
depending on the Companys Consolidated Total Leverage Ratio, with a parallel increase in the margin for borrowings based on the Base Rate, and the quarterly commitment fee will range from 0.20% to 0.50%, also depending on the Companys
Consolidated Total Leverage Ratio. There will also be a LIBOR floor of 0.75%.
During the Covenant Relief Period, dividends and share
repurchases will be limited to a total of $10 million; acquisitions will be prohibited; and capital expenditures will be limited to $20 million in any fiscal year. The limit on capital expenditures will be prorated if the Covenant Relief
Period ends during a fiscal year.
Certain lender parties to the Credit Agreement and certain of their respective affiliates have
performed in the past, and may from time to time perform in the future, commercial banking, investment banking and other financial advisory services for the Company and its affiliates for which they have received, and/or will receive, customary fees
and expenses.
The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by
reference to the full text of the Second Amendment, a copy of which is attached hereto as Exhibit 10 and incorporated herein by reference.