QualTek amends ABL facility, extends $130 million availability period

By William Gullotti

Buffalo, N.Y., Dec. 29 – QualTek Services Inc., through its wholly owned subsidiaries QualTek Buyer, LLC and QualTek LLC, amended its ABL credit and guaranty agreement on Dec. 23 to extend its increased revolver commitments through June 30, 2023, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, the total revolver commitments were increased by $26.5 million to $130 million on Sept. 19. Initially, the increased commitment period was scheduled to expire Dec. 31.

For the period starting and including July 1, 2023, the availability will step down to $120 million and remain at that level through Dec. 31, 2023. After that, the revolver commitments will return to the original $103.5 million level.

The ABL facility continues to include a swingline subfacility and a letter-of-credit subfacility.

Interest on the principal amounts outstanding is based on an adjusted BSBY rate plus an applicable margin. For the duration of the increased commitments, from the effective date through Dec. 31, 2023, the margin will be 400 basis points. Starting Jan. 1, 2024, the date when the revolver returns to its original capacity, the margin steps down to 375 bps.

The amendments modified the cap on the amount of eligible unbilled accounts receivable included in the borrowing base from 75% to 50% of the aggregate borrowing base beginning on Sept. 1, 2023 and suspended the fixed-charge coverage ratio covenant until the first quarter of 2024.

A new financial covenant was added, which will be effective for the duration of the increased commitments, which requires a minimum consolidated adjusted EBITDA level for each quarter.

The ABL facility will still mature on July 17, 2025.

PNC Capital Markets LLC is the lead arranger and bookrunner. PNC Bank, NA is the administrative agent, collateral agent and lender.

QualTek is a Blue Bell, Pa.-based provider of turnkey services to the North American telecommunications, infrastructure and power industries.

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