8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

September 21, 2011

MAC-GRAY CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	1-13495	04-3361982
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)

404 Wyman Street, Suite 400, Waltham, Massachusetts 02451

 (Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (781) 487-7600

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

On September 21, 2011, Mac-Gray Corporation (the “Company”) entered into Amendment No. 4 (the “Amendment”) to the Senior Secured Credit Agreement (the “Credit Agreement”), dated as of April 1, 2008, among the Company, Mac-Gray Services, Inc., the lenders party thereto and Bank of America, N.A., as Administrative Agent and Collateral Agent.   The Amendment provides that the Company may repurchase or redeem up to $50,000,000 in aggregate principal amount of its outstanding 7.625% Senior Notes due 2015 at an aggregate price not to exceed $53,000,000 so long as (x) at the time of the repurchase or redemption, no default or event of default exists under the Credit Agreement and (y) on a pro forma basis for the repurchase or redemption, the Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement) does not exceed 2.25:1.0.  A copy of the Amendment is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Item 8.01. Other Events

On September 22, 2011, the Company issued a press release announcing that it will redeem $50,000,000 in aggregate principal amount of its outstanding 7.625% Senior Notes due 2015 on October 21, 2011 for an aggregate redemption price of $51,969,958.33.  A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d)	Exhibits
	10.1	Amendment No. 4 to the Senior Secured Credit Agreement, dated as of September 21, 2011, among Mac-Gray Corporation, Mac-Gray Services, Inc., the lenders party thereto and Bank of America, N.A., as Administrative Agent and Collateral Agent
	99.1	Press Release of Mac-Gray Corporation, dated September 22, 2011

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MAC-GRAY CORPORATION
Date:   September 22, 2011	By:	/s/ Michael J. Shea
		Name:	Michael J. Shea
		Title:	Executive Vice President, Chief Financial Officer and Treasurer

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Amendment No. 4 to the Senior Secured Credit Agreement, dated as of September 21, 2011, among Mac-Gray Corporation, Mac-Gray Services, Inc., the lenders party thereto and Bank of America, N.A., as Administrative Agent and Collateral Agent
99.1	Press Release of Mac-Gray Corporation, dated September 22, 2011

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EX-10.1

Exhibit 10.1

AMENDMENT NO. 4

THIS AMENDMENT NO. 4, dated as of September 21, 2011 (this “Amendment”), to that certain Credit Agreement referenced below is by and among MAC-GRAY CORPORATION, a Delaware corporation (the “Parent Borrower”), and MAC-GRAY SERVICES, INC., a Delaware corporation (“MGS”; together with the Parent Borrower, each a “Borrower” and collectively the “Borrowers”), the Lenders party hereto and BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent.  Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Credit Agreement.

W I T N E S S E T H

WHEREAS, a $170,000,000 revolving credit and term loan facility was established in favor of the Borrowers pursuant to the terms of that certain Senior Secured Credit Agreement dated as of April 1, 2008 (as amended and modified, the “Credit Agreement”) among the Borrowers, the subsidiaries and affiliates identified therein, as guarantors, the lenders identified therein, and Bank of America, N.A., as administrative agent;

WHEREAS, the Parent Borrower is contemplating a voluntary redemption of $50,000,000 in aggregate principal amount of those certain 7.625% senior notes issued by the Parent Borrower on August 16, 2005 (the “Senior Notes”), with an aggregate outstanding principal amount of approximately $150,000,000 as of the date hereof, and has requested a modification to the Credit Agreement to permit such voluntary redemption;

WHEREAS, the Lenders have agreed to the requested modifications on the terms and conditions set forth herein;

1.Amendment to the Credit Agreement.

(a)Section 7.08(b) of the Credit Agreement is amended to include a new clause (vi) to read as follows:

(vi)from time to time, voluntary repurchases or redemptions of up to $50,000,000 in aggregate principal amount of the Senior Notes at an aggregate price not to exceed $53,000,000, so long as, with respect to each such repurchase or redemption , (A) no Default or Event of Default then exists and (B) the Parent Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Parent Borrower demonstrating that the Consolidated Senior Secured Leverage Ratio, recomputed as of the end of the period of the four fiscal quarters most recently ended for which the Borrower has delivered financial statements pursuant to Section 6.01(a) or (b) after giving effect to such voluntary repurchase or redemption on a Pro Forma Basis, does not exceed 2.25:1.0.

(b) Section 8.01(g) of the Credit Agreement is hereby amended in its entirety to read as follows:

(g)any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the

prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness and (ii) any voluntary repurchases or redemptions of Senior Notes to the extent permitted by Section 7.08(b)(vi);

2.Conditions Precedent.  This Amendment shall be effective upon the Administrative Agent’s receipt of each of the following:

(a)duly executed counterparts of this Amendment from the Borrowers, the Administrative Agent and the Required Lenders; and

(b)a certificate of a secretary or assistant secretary of each Borrower certifying that the resolutions of the board of directors of such Borrower delivered at the closing of the Credit Agreement have not been rescinded or modified and remain in full force and effect on the date hereof, including an updated incumbency certificate with respect to each of the Borrowers.

3.Miscellaneous.

3.1Full Force and Effect.  Except as modified hereby, all of the terms and provisions of the Credit Agreement and the other Loan Documents (including schedules and exhibits) remain in full force and effect.

3.2Affirmations and Representations and Warranties of the Borrowers.  Each of the Borrowers hereby affirms, represents and warrants (a) the representations and warranties set forth in Article V of the Credit Agreement are true and correct as of the date hereof (i) to the extent such representation or warranty is modified or qualified based on the terms “materially” or “material” or by reference to the term “Material Adverse Effect”, in any respect and (ii) to the extent such representation or warranty is not so modified or qualified, in any material respect on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct (A) to the extent such representation or warranty is modified or qualified based on the terms “materially” or “material” or by reference to the term “Material Adverse Effect”, in any respect and (B) to the extent such representation or warranty is not so modified or qualified, in any material respect as of such earlier date, and (b) no Default or Event of Default exists as of the date hereof.

3.3Affirmation of Liens.  Each of the Borrowers hereby affirms the liens and security interests created and granted in the Loan Documents and agrees that this Amendment is not intended to adversely affect or impair such liens and security interests in any manner.

3.4Acknowledgment of Obligations.  Each of the Borrowers (a) acknowledges and consents to all of the terms and conditions of this Amendment, (b) affirms such Borrower’s obligations under the Loan Documents and (c) agrees that this Amendment does not operate to reduce or discharge such Borrower’s obligations under the Loan Documents.

3.5Fees and Expenses.  The Borrowers agree to pay all reasonable fees and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of Moore & Van Allen, PLLC, counsel to the Administrative Agent.

3.6Counterparts; Delivery.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and it shall not

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be necessary in making proof of this Amendment to produce or account for more than one such counterpart.  Delivery by any party hereto of an executed counterpart of this Amendment by facsimile shall be effective as such party’s original executed counterpart.

3.7Amendment is a Loan Document.  Each of the parties hereto hereby agrees that this Amendment is a Loan Document.

3.8Governing Law.  This Amendment shall be governed by, and construed in accordance with, the law of the State of New York.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

BORROWERS:	MAC-GRAY CORPORATION,
	a Delaware corporation
	By:	/s/ Michael J. Shea
	Name:	Michael J. Shea
	Title:	Executive Vice President & Chief Financial Officer
	MAC-GRAY SERVICES, INC.,
	a Delaware corporation
	By:	/s/ Michael J. Shea
	Name:	Michael J. Shea
	Title:	Executive Vice President & Chief Financial Officer
ADMINISTRATIVE AGENT:	BANK OF AMERICA, N.A.,
	as Administrative Agent and Collateral Agent
	By:	/s/ Charlene Wright-Jones
	Name:	Charlene Wright-Jones
	Title:	Assistant Vice President
LENDERS:	BANK OF AMERICA, N.A.,
	as L/C Issuer, Swingline Lender and as a Lender
	By:	/s/ Christopher S. Allen
	Name:	Christopher S. Allen
	Title:	Senior Vice President
	FIFTH THIRD BANK
	By:	/s/ Valerie Schanzer
	Name:	Valerie Schanzer
	Title:	Vice President

MAC-GRAY CORPORATION

AMENDMENT NO. 4

KEYBANK NATIONAL ASSOCIATION
By:	/s/ James Gelle
Name:	James Gelle
Title:	Vice President
WELLS FARGO BANK N.A.
By:	/s/ Gary A. Pirri
Name:	Gary A. Pirri
Title:	Senior Vice President
TD BANK, NA
By:	/s/ Alan Garson
Name:	Alan Garson
Title:	Senior Vice President
EASTERN BANK
By:	/s/ Robert J. Moodie
Name:	Robert J. Moodie
Title:	Senior Vice President
SOVEREIGN BANK
By:	/s/ Penny Garver
Name:	Penny Garver
Title:	Senior Vice President
RBS CITIZENS. N.A.
By:	/s/ Henry L. Petrillo
Name:	Henry L. Petrillo
Title:	Senior Vice President
SUNTRUST BANK
By:	/s/ Chris Hulsey
Name:	Chris Hulsey
Title:	Vice President

MAC-GRAY CORPORATION

AMENDMENT NO. 4

BANK OF THE WEST
By:	/s/ Sidney Jordan
Name:	Sidney Jordan
Title:	Vice President
BROWN BROTHERS HARRIMAN & CO.
By:	/s/ J. Edward Hall
Name:	J. Edward Hall
Title:	Managing Director
SALEM FIVE CENTS SAVINGS BANK
By:	/s/ Joseph V. Leary
Name:	Joseph V. Leary
Title:	Senior Vice President
HSBC BANK USA, NATIONAL ASSOCIATION
By:	/s/ Manuel Burgueño
Name:	Manuel Burgueño
Title:	Vice President
FIRSTRUST BANK
By:	/s/ Ellen Frank
Name:	Ellen Frank
Title:	Vice President

EX-99.1

Exhibit 99.1

	FOR IMMEDIATE RELEASE

Contacts:	Jim Buckley
Michael J. Shea	Executive Vice President
Chief Financial Officer	Sharon Merrill
Mac-Gray Corporation	617-542-5300
781-487-7600	Email: tuc@investorrelations.com
Email: mshea@macgray.com

Mac-Gray Corporation Announces Redemption
of $50 Million in Senior Notes

Company Expects Significant Interest Rate Savings

WALTHAM, MA, September 22, 2011 — Mac-Gray Corporation (NYSE: TUC), the nation’s premier provider of laundry facilities management services to multi-unit housing locations, today announced that it has begun the process to redeem $50 million of its $150 million in outstanding 7.625% senior notes due August 15, 2015.

Mac-Gray will use approximately $52 million of availability under the revolver portion of its senior credit agreement to redeem $50 million of its outstanding notes.  The redemption price for the notes will be 102.542%.  Under the terms of its credit agreement, Mac-Gray will pay an interest rate of LIBOR plus a spread of between 2% and 2.5% on the funds borrowed to redeem the notes.  If there is not a significant change in LIBOR, Mac-Gray expects the cash payback on this strategy to be approximately six to eight months.

“The Company has been successful in the past at using the low interest rate environment to its advantage. In January 2010 we entered into an interest rate swap that effectively converted $100 million of our fixed rate senior note interest to floating,” said Michael J. Shea, Mac-Gray’s Chief Financial Officer.  “As a result, from January 2010 to August 2011 the Company saved $4.3 million in cash interest.  In August 2011, the Company’s bank exercised its option to unwind the swap and paid Mac-Gray $2.6 million.”

“Recently we determined there was another opportunity to significantly lower the Company’s overall interest expense by converting a portion of our fixed rate senior notes to the lower variable rate currently available through our revolver. In light of the Federal Reserve’s announcement that it plans to keep interest rates near zero until at least mid-2013, we believe there is little likelihood that LIBOR will change dramatically over that time.  Given this environment and the approximately $80 million of current availability under our revolver, we believe the redemption is a prudent financial decision that is in the best interest of our shareholders. In connection with the redemption, the Company will realize a non-cash charge in the second half of the year of approximately $600,000 of unamortized costs associated with the cost of the original 2005 notes offering and a cash expense of approximately $1.3 million representing the cash redemption premium.”

About Mac-Gray Corporation

Founded in 1927, Mac-Gray derives its revenue principally through the contracting of debit-card- and coin-operated laundry facilities in multi-unit housing facilities such as apartment buildings, college and university residence halls, condominiums and public housing complexes. Mac-Gray manages approximately 86,000 laundry rooms located in 43 states and the District of Columbia. Mac-Gray also sells and services commercial laundry equipment to retail laundromats and other customers through its product sales division. To learn more about Mac-Gray, visit the Company’s website at www.macgray.com.

Safe Harbor Statement

This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the Company’s plans to redeem a portion of its outstanding senior notes, the related accounting consequences and the Company’s expectations for future interest rates and interest expense savings.  The Company intends such forward-looking statements to be covered by the Safe Harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with these Safe Harbor provisions.  Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, may be identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “project,” or similar expressions.  Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from such forward-looking statements.  Certain factors which could cause actual results to differ materially from the forward-looking statements include, but are not limited to, general economic conditions, changes in multi-housing vacancy rates, the Company’s ability to renew long-term customer contracts, and those risks set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 under “1A. Risk Factors” and in other reports subsequently filed with the Securities and Exchange Commission.  Except as required by law, the Company does not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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