Item 1.01. Entry into a Material Definitive Agreement.
On May 23, 2019, CSS Industries, Inc. (the “
Company
”) and certain of its subsidiaries (together with the Company, the “
Borrowers
”) entered into a Second Amendment (the “
Amendment
”) to its Credit Agreement, dated March 7, 2019, with JPMorgan Chase Bank, N.A., as administrative agent (the “
Agent
”), and Bank of America, N.A. and KeyBank National Association, as lenders (the “
Credit Agreement
”). The Amendment reduces the aggregate principal amount of the revolving credit facility provided for in the Credit Agreement (the “
Revolving Credit Facility
”) from $125 million to $100 million. Availability under the Revolving Credit Facility is now equal to the lesser of $100 million or a Borrowing Base (as defined in the Credit Agreement), in each case minus (i) revolving loans outstanding and (ii) $15 million until the Agent’s receipt of a compliance certificate demonstrating compliance with the following financial covenants:
1.
Commencing with the twelve-month period ending March 31, 2020, the Borrowers will not permit the Fixed Charge Coverage Ratio (as defined in the Credit Agreement), as of the end of any calendar month, to be less than 1.00 to 1.00.
2.
Commencing with the month ended April 30, 2019 and continuing until the calendar month ending March 31, 2020, the Borrowers shall have, at the end of each calendar month during such period, EBITDA for the corresponding period (which such period shall be based on a cumulative monthly build-up commencing with the month ended April 30, 2019) then ending of not less than the corresponding amount set forth on a schedule to the Credit Agreement.
3.
Capital Expenditures (as defined in the Credit Agreement) of the Borrowers and their Subsidiaries shall not exceed $8 million for the fiscal year ending March 31, 2020.
Permitted Acquisitions (as defined in the Credit Agreement) are no longer permitted under the Credit Agreement, and certain Restricted Payments (as defined in the Credit Agreement) that were previously allowed based upon meeting certain leverage ratio and average Availability (as defined in the Credit Agreement) criteria are no longer allowed. The Amendment revises the financial reporting requirements to require monthly management prepared financial statements, and a thirteen-week cash flow forecast of the Company and its Subsidiaries to be delivered on a weekly basis commencing no later than five weeks after the effective date of the Amendment until the Borrowers demonstrate compliance with the financial covenants described above. In connection with the Amendment, the Company paid amendment and structuring fees totaling $950,000.
The foregoing descriptions of the Amendment do not purport to be complete and are qualified in their entirety by reference to the Amendment, which is filed as Exhibit 99.1 to this Current Report on Form 8-K.
Some of the lenders under the Credit Agreement and their affiliates have various relationships with the Company involving the provision of financial services, including cash management and other services.
