Atlas Technical gets term loans, revolver totaling $567 million

By Rebecca Melvin

New York, Feb. 26 – Atlas Intermediate Holdings LLC, a subsidiary of Atlas TC Holdings LLC and Atlas Technical Consultants Inc., has obtained a new $432 million senior secured term loan, $75 million committed delayed draw down loan and a $40 million senior secured revolver, which remained undrawn as of Thursday, when the new facilities closed, according to an 8-K filing with the Securities and Exchange Commission and company news release.

The credit agreements were part of an overall recapitalization, which included redemption of the company’s $154 million series A senior preferred units at par plus accrued dividends.

The term loan was entered into with Wilmington Trust NA as administrative agent, and the asset-based revolver, which may be increased by up to $20 million, was entered into with JPMorgan Chase Bank NA as administrative agent.

The new term loan refinances a credit agreement dated Feb. 14, 2020 with Macquarie Capital Funding LLC as administrative agency, with some proceeds from the new debt being used to repay the $270 million of outstanding borrowings under the existing term loan and rolling in about $62 million into the new loan.

The new term loan matures on Feb. 25, 2028, and the revolver matures on Feb. 25, 2026.

Pricing of the outstanding borrowings of the term loan, which is payable quarterly, will be Libor plus 550 basis points, and the interest under the revolver, which will be payable monthly, will be Libor plus 250 bps.

Atlas TC Holdings is guarantor of the credit agreements, which are secured. The revolver is secured by a first-priority security interest in the current assets, including accounts receivable, of Holdings, Intermediate and its subsidiaries. The term loan is secured by a pledge of the equity interests of the subsidiaries of Holdings and Intermediate, and subject to the first-lien security interest on current assets under the revolver, a first priority lien on substantially all other assets of Holdings, Intermediate and all of their direct and indirect subsidiaries.

The credit agreements include some negative covenants that impose limits on the company. The term loan contains a financial covenant that requires Holdings, Intermediate and all direct and indirect subsidiaries on a consolidated basis to maintain a total net leverage ratio that does not exceed 8.25:1 for the fiscal quarters ending April 2 and July 2, and 8:1 for the fiscal quarters ending Oct. 1, 2021 and Dec. 31, 2021.

The ratio is 7.5:1 for the fiscal quarters ending April 1, 2022 and July 1, 2022, and 7.25: 1 for the fiscal quarters ending Sept. 30, 2022 and Dec. 30, 2022. It is 7:1 for the fiscal quarters ending March 31, 2023 and June 30, 2023, 6.75:1 for the fiscal quarters ending Sept. 29, 2023 and Dec.29, 2023, and 6.5:1 for March 29, 2024 and thereafter.

The ABL revolver contains a “springing” financial covenant that requires Holdings, Intermediate and all of their direct and indirect subsidiaries on a consolidated basis to maintain a fixed charge coverage ratio of at least 1.1:1 when the outstanding principal amount of loans under the revolver exceeds $0 or the aggregate exposure for letters of credit under the revolver exceeds $5 million.

With headquarters in Austin, Texas, Atlas Technical Consultants provides professional infrastructure and construction testing, inspection and certification in the U.S. market.

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