Orchids Paper amends credit agreement terms, waives events of default

By Tali Rackner

Minneapolis, March 6 – Orchids Paper Products Co. entered into a seventh amendment to its second amended and restated credit agreement on Feb. 28, according to an 8-K filing with the Securities and Exchange Commission.

The amendment waives any existing events of default and any potential events of default that would result from the company’s breach of an existing financial covenant for the period ending March 31, 2018.

The amendment also reinstates the minimum fixed charge coverage requirement of 1.2 times as of June 30, 2018 and changes the maximum leverage ratio requirement to 5.5 times as of June 30, 2018, stepping down to 3.5 times on Sept. 30, 2018 and thereafter.

In addition, principal payments will now be made monthly, rather than quarterly, and the borrowing base was revised so that the advance rates on eligible accounts receivable and certain items of inventory will increase through June 30, 2018, when those rates will revert to the rates that were in place before the amendment.

Furthermore, the pricing schedule applicable to interest rates and the commitment fees was revised to increase such rates and fees by 100 basis points when the leverage ratio is at the highest level.

Orchids Paper also established additional financial covenants as part of the amendment.

The company paid an amendment fee of $632,000.

U.S. Bank NA is the administrative agent.

Orchids makes consumer tissue products and is based in Pryor, Okla.

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