Manitowoc changes covenant and pricing, removing accordion feature

By Sara Rosenberg

New York, June 15 - Manitowoc Co. Inc. amended its credit facility, modifying covenants, increasing pricing and eliminating the option to increase the borrowing capacity of the revolver or term loan A, according to an 8-K filed with the Securities and Exchange Commission on Monday.

Under the amendment, the minimum consolidated interest coverage ratio was reduced for each fiscal quarter ending between Sept. 30, 2009 and June 30, 2012 to between 1.875 to 1.00 and 2.75 to 1.00 from between 2.75 to 1.00 and 3.00 to 1.00, depending on the quarter.

The maximum consolidated total leverage ratio was increased for each fiscal quarter ending between June 30, 2009 and Sept. 30, 2012 to between 4.00 to 1.00 and 7.375 to 1.00 from between 3.50 and 1.00 and 4.00 to 1.00, depending on the quarter.

A new consolidated senior secured leverage ratio was added for each fiscal quarter ending on or after June 30, 2011 of 3.50 to 1.00 and 5.25 to 1.00, depending on the fiscal quarter.

And, a new covenant limiting capital expenditures was added.

Pricing on the facility was increased to a range of Libor plus 375 basis points to 500 bps based on total leverage from a range of Libor plus 200 bps to 325 bps, and pricing on the term loan B was increased to Libor plus 450 bps with a step up to Libor plus 500 bps based on leverage.

In addition, the amendment adds or increases mandatory prepayment requirements upon the sale of equity from excess cash flow or in connection with the sale of long-term debt or accounts receivable in securitization transactions, and further restricts the company's ability to pay dividends and distributions and to make acquisitions.

The amendment was completed on June 12.

Lenders were paid a 50 bps amendment fee.

JPMorgan is the administrative agent on the deal.

"Our amendment was not driven by liquidity issues, but rather due to the financial ratio impact of lower sales volumes and reduced profitability during these challenging economic times," said Glen E. Tellock, chairman and chief executive officer, in a company news release. "We are pleased that our lenders agreed with the terms of the proposed amendment, which not only gives us the flexibility to manage our businesses during this downturn and continue our debt reduction objectives, but also enables us to strongly position the company to take full advantage of the next upturn."

Manitowoc is a Manitowoc, Wis.-based manufacturer and seller of cranes and related products, and foodservice equipment.

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