American Woodmark enters $600 million five-year credit agreement

By Marisa Wong

Morgantown, W.Va., Jan. 5 – American Woodmark Corp. entered into a $600 million credit agreement on Dec. 29 with a syndicate of lenders arranged by Wells Fargo Securities, LLC as lead arranger and bookrunner and Wells Fargo Bank, NA as administrative agent.

American Woodmark entered into the credit agreement in connection with the completion of its acquisition of RSI Home Products, Inc., according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement provides for a $100 million five-year revolving loan facility, a $250 million five-year initial term loan facility and a $250 million delayed draw term loan facility.

The revolver also includes an up to $25 million sub-facility for the issuance of letters of credit.

The company borrowed the entire $250 million of initial term loans and about $50 million of revolving loans on Dec. 29 in connection with the closing of the acquisition.

The company may borrow the delayed draw term loans at any time prior to March 31, at which time any portion of the delayed draw term loan that remains undrawn will be automatically canceled.

The company is required to repay aggregate outstanding term loans, including the initial term loans and any delayed draw term loans, in quarterly installments beginning on April 30. The balance must be repaid at maturity on Dec. 29, 2022.

Borrowings will bear interest at Libor plus an applicable margin based on the company’s then-current total funded debt to EBITDA ratio. The applicable margin ranges from 125 basis points to 225 bps and is initially 200 bps.

The company will also pay a quarterly commitment fee at a rate of 15 bps to 30 bps, based on the total funded debt to EBITDA ratio. The commitment fee is initially 25 bps.

The company may permanently reduce the amount of the revolver at any time. In the event that the delayed draw term loan is not funded or terminated in full by Feb. 28, the company must pay a 30-bps ticking fee on the full delayed draw term loan of $250 million.

The credit agreement contains financial covenants requiring maintenance of a minimum fixed-charge coverage ratio, a maximum total funded debt to EBITDA ratio and a maximum total secured debt to EBITDA ratio.

Loan proceeds may generally be used for working capital and general corporate purposes. Proceeds from the delayed draw term loans, if borrowed, may only be used to refinance in part RSI’s existing 6˝% senior secured second-lien notes due 2023.

Based in Winchester, Va., American Woodmark manufactures and distributes bath, kitchen and home organization products for the remodeling and new home construction markets.

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