HNI enters $280 million delayed-draw term loan for Kimball merger

By Wendy Van Sickle

Columbus, Ohio, April 4 – HNI Corp. entered into a term loan credit agreement on March 31 with Wells Fargo Bank, NA as administrative agent that provides for a $280 million unsecured delayed-draw term loan, according to an 8-K filing with the Securities and Exchange Commission.

Proceeds are to be used solely for the consummation of the proposed merger of subsidiary Ozark Merger Sub, Inc. with and into Kimball International, Inc., including payment of a portion of the consideration, repayment of Kimball debt and payment of related fees and expenses, under a plan dated March 7.

The commitments will terminate on the earliest of the date on which the loans are made, the termination of the acquisition agreement prior to closing, the date on which the acquisition closes without use of the term loans and 5 p.m. ET on the first business say following the termination date defined in the acquisition agreement.

The principal and unpaid interest will be due on the first anniversary of funding of the term loans, and HNI must make quarterly installments starting from the effective date through the quarter ending June 30, 2024 through the quarter ending March 31, 2026 at 5% of the original principal amount, stepping up to 7.5% from the quarter ending June 30, 2026 through the quarter ending March 31, 2027 and to 10% from the quarter ending June 30, 2027 and thereafter.

Borrowings will bear interest at an adjusted term SOFR rate plus a margin of 112.5 basis points to 187.5 bps, depending on the company’s leverage ratio.

Financial covenants require the maintenance of a maximum leverage ratio and a minimum interest coverage ratio.

Wells Fargo Securities, LLC and U.S. Bank NA are the joint lead arrangers and bookrunners.

U.S. Bank is the syndication agent.

HNI is a Muscatine, Iowa-based manufacturer of workplace furnishings and residential building products. Kimball is a Jasper, Ind.-based commercial furnishings company.

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