Construction Partners trims interest, adjusts covenants via amendment

By Sarah Lizee

Olympia, Wash., Aug. 30 – Construction Partners, Inc. amended its credit agreement with BBVA USA as agent on Friday to reduce interest, according to an 8-K filing with the Securities and Exchange Commission.

The amendment decreases the baseline interest rate payable on the $72 million term loan and the $30 million revolver to Libor plus 120 basis points from Libor plus 200 bps.

Also, a four-tier escalating interest rate was established that increases to a maximum rate of Libor plus 170 bps if the company’s consolidated leverage ratio exceeds 2%.

The amendment also reduces both the fee to be paid for letters of credit issued on behalf of the company and the fee for unused balances in the revolver.

The quarterly repayment of principal under the term loan was reduced to 2.5% of the original borrowed amount from 5% previously.

Additionally, some financial covenants were amended, including increasing the maximum consolidated leverage ratio to 2.75 to 1.0 from 2.0 to 1.0 and redefining the fixed coverage charge ratio to eliminate lease payments from the calculation and more closely align with the adjusted EBITDA measure that the company uses in its filings with the SEC.

No additional borrowings were made under either the term loan or revolver under the amendment.

Construction Partners in an infrastructure and road construction company based in Dothan, Ala. It is a portfolio company of SunTx Capital Partners, a Dallas-based private equity firm.

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