TRM restructures credit facilities in light of covenant compliance defaults

By Caroline Salls

Pittsburgh, Nov. 22 - TRM Corp. restructured its existing credit facilities with Wells Fargo Foothill, Inc. and GSO Origination funding Partners LP as a result of financial covenant compliance defaults, according to an 8-K filing with the Securities and Exchange Commission.

The credit facilities include a $45.5 million first-lien credit agreement with TRM ATM Corp. and TRM Copy Centers (USA) Corp, a $40 million second-lien loan agreement, and a £12.9 million U.K. facility agreement between wholly owned subsidiary TRM (ATM) Ltd. and GSO Luxembourg Onshore Funding SarL.

First-lien loan amendments

As a result of the restructuring, existing defaults under the first-lien credit agreement were waived, and the agreement was amended as follows:

• The interest on both the term loan and revolving loan and revolving loan portions of the facility remained at Libor plus 400 basis points, however, an additional 200 bps of interest will accrue above the payment rate and be added to principal;

• A $10 million principal payment will be due Jan. 31 and the outstanding balance of the principal and interest will be due Feb. 28;

• The net proceeds of any disposition of assets must be applied to prepay the loans;

• Financial covenants regarding leverage and fixed charge coverage ratios were terminated. The existing covenant regarding the amount of the company's consolidated adjusted EBITDA was modified to require that consolidated adjusted EBITDA meet specified monthly amounts, and the existing covenant regarding capital expenditures was modified to permit the expenditures in specified monthly amounts.

TRM incurred a loan amendment fee of 1.00% of the outstanding balance in connection with the amendment, which was added to the principal balance of the term loan portion of the facility.

Second-lien loan amendments

Existing defaults under the second-lien loan agreement were also waived, and the agreement was amended as follows:

• The outstanding balance was split into two tranches, a $15 million term A tranche and a $25 million term B tranche, with the term B tranche subordinated to the term A tranche;

• The interest rate on the term A tranche remained at Libor plus 700 bps, but an additional 200 bps will accrue above the payment rate and be added to the principal;

• Interest on the term B tranche has been reset at Libor plus 1,200 basis points;

• The term A tranche will be due on Feb. 28, and the term B tranche will due June 6, 2012;

• The company can voluntarily prepay the term B tranche after payment of the term A tranche or with the consent of the holders of the term A tranche;

• The net proceeds of any disposition of assets must be applied to prepay first the term A tranche and then the term B tranche; and

• The financial covenants were amended to conform to the amendments of the first-lien credit agreement.

TRM incurred an amendment fee of 1.00% of the outstanding principal balance in connection with the amendment, which was added ratably to the principal balance of the two tranches.

In addition, the company issued warrants for 3.07 million shares of common stock to the lenders under the second-lien loan agreement, with an exercise price of 105% of the average of the weighted average price of the common stock on the seven trading days following Nov. 20.

The warrants may be exercised at any time and expire on Nov. 20, 2013.

U.K. facility amendments

Existing defaults under the U.K. facility agreement were also waived, and the agreement was amended as follows:

• The outstanding balance of principal and interest will be due Feb. 28;

• The net proceeds of any disposition of assets must be applied to prepay the loan; and

• All of the financial covenants were terminated.

The company incurred a loan amendment fee of 1.00% of the outstanding balance.

TRM is a Portland, Ore.-based provider of ATM and photocopying services.

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