Tennant amends $80 million private shelf agreement with Prudential

By Lisa Kerner

Charlotte, N.C., May 10 - Tennant Co. entered into a first amendment to its July 29, 2009 private shelf agreement with Prudential Investment Management, Inc. and its affiliates, according to an 8-K filing with the Securities and Exchange Commission.

The amended agreement:

• Eliminates the security interest in the personal property of Tennant and its subsidiaries;

• Provides that the maximum leverage ratio not be greater than 3.00 to 1 for any period ending on or after March 31, 2011;

• Restricts the payment of dividends or repurchasing of stock if the company's leverage ratio is greater than 2.00 to 1, in such case limiting such payments to an amount ranging from $50 million to $75 million during any fiscal year; and

• Limits Tennant's acquisitions to $25 million if its leverage ratio is greater than 2.75 to 1.

As previously reported, Tennant entered into the agreement with Prudential. The company can issue up to $80 million of senior secured notes to the investor under the shelf.

Notes issued under the shelf may have a maturity of up to 12 years, provided that the average life for each private shelf note issued is no more than 10 years after the original issuance date.

Under the original shelf agreement, Tennant was required to maintain a debt-to-EBITDA ratio for the second and third quarters of 2009 of not greater than 4.00 to 1 and 5.5 to 1, respectively. After that, the ratio could not exceed 3.5 to 1 as of the end of each quarter.

Tennant was also required to maintain an EBITDA-to-interest expense ratio for the third quarter of 2009 of not less than 3.25 to 1 and then no less than 3.5 to 1.

Also under the agreement, Tennant was prohibited from conducting share repurchases during the 2009 fiscal year. The agreement limited the payment of dividends or repurchases of stock in fiscal years after 2009 to $12 million to $40 million based on Tennant's leverage ratio.

Tennant is a Minneapolis-based designer, manufacturer and marketer of cleaning solutions.

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