UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 18,
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of Principal Executive Offices) | (ZIP Code) |
Registrant’s telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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):
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ❑
| Item 1.01 | Entry into a Material Definitive Agreement |
On May 18, 2022, Trex Company, Inc. (Company), as borrower; Trex Commercial Products, Inc. (TCP), as guarantor; Bank of America, N.A. (BOA), as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer; Wells Fargo Bank, National Association (Wells Fargo), as lender and Syndication Agent; Regions Bank, PNC Bank, National Association, and TD Bank, N.A. (each, a Lender and collectively, the Lenders), arranged by BofA Securities, Inc. as Sole Lead Arranger and Sole Bookrunner, entered into a Credit Agreement (Credit Agreement) to amend and restate the Fourth Amended and Restated Credit Agreement dated as of November 5, 2019 (Fourth Amended and Restated Credit Agreement), by and among the Company, as borrower; TCP as guarantor; BOA, as a lender, Administrative Agent, Swing Line Lender and L/C Issuer; Wells Fargo; Branch Banking & Trust Company and SunTrust Bank, each as a lender; and BofA Securities, Inc., as Sole Lead Arranger and Sole Bookrunner, as amended.
Credit Agreement
Under the Credit Agreement, the Lenders agreed to provide the Company with one or more Revolving Loans in a collective maximum principal amount of $400,000,000 (Loan Limit) throughout the term, which ends May 18, 2027 (Term). Previously, under the Fourth Amended and Restated Credit Agreement, BOA, Wells Fargo, Branch Banking & Trust Company and SunTrust Bank agreed to provide the Company with one or more revolving loans in a collective maximum principal amount of $250,000,000 from January 1 through June 30 of each year and a maximum principal amount of $200,000,000 from July 1 through December 31 of each year throughout the term, which would have ended on November 5, 2024 if not replaced by the Credit Agreement. Pursuant to a First Amendment to the Fourth Amended and Restated Credit Agreement dated as of May 26, 2020, the lenders thereunder agreed to provide an additional $100 million line of credit through May 26, 2022.
Included within the Loan Limit are sublimits for a Letter of Credit facility in an amount not to exceed $60,000,000; and Swing Line Loans in an aggregate principal amount at any time outstanding not to exceed $20,000,000. The Revolving Loans, the Letter of Credit facility and the Swing Line Loans are for the purpose of raising working capital and supporting general business operations.
The Notes and Interest Rates
The Notes provide the Company, in the aggregate, the ability to borrow an amount up to the Loan Limit during the Term. The Company is not obligated to borrow any amount under the Loan Limit. Within the Loan Limit, the Company may borrow, repay and reborrow at any time or from time to time while the Notes are in effect.
Base Rate Loans (as defined in the Credit Agreement) under the Revolving Loans and the Swing Line Loans accrue interest at the Base Rate plus the Applicable Rate (as defined in the Credit Agreement) and Term SOFR Loans for the Revolving Loans accrue interest at the rate per annum equal to the sum of Term SOFR for such Interest Period plus the Applicable Rate (as defined in the Credit Agreement).
The Base Rate for any day is a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by BOA as its prime rate, and (c) the Term SOFR plus 1.0% subject to certain interest rate floors.
The Applicable Rate means the following percentages per annum, based upon the Consolidated Debt to Consolidated EBITDA Ratio as set forth in the most recent Compliance Certificate received by BOA as the Administrative Agent and as set forth in the Credit Agreement:
| Pricing Tier |
Consolidated Ratio |
Term SOFR Loans/ Letter of Credit Fee |
Base Rate Loans | Fee | ||||
| 1 |
≥ 2:50:1.00 | 1.80% | 0.80% | 0.20% | ||||
| 2 |
<2.50:1.00 but ≥2.00:1.00 | 1.45% | 0.45% | 0.16% | ||||
| 3 |
<2.00:1.00 but ≥1.50:1.00 | 1.20% | 0.20% | 0.12% | ||||
| 4 |
<1.50:1.00 | 0.80% | 0.00% | 0.08% |
Repayment of all then outstanding principal, interest, fees and costs is due at the end of the Term.
Letter of Credit Facility
The Letter of Credit facility provides that upon application by the Company, BOA shall issue to the Company’s credit one or more letters of credit in the aggregate amount of up to $60,000,000, or such lesser amount as may be required by law.
ESG Option
After the Closing Date, the Company and BofA Securities, Inc. as a sustainability coordinator, shall be entitled to establish specified key performance indicators (KPIs) with respect to certain environmental, social and governance targets of the Company and its subsidiaries. The sustainability coordinator and the Company may amend the Credit Agreement and ancillary definitive agreement for the purpose of incorporating the KPIs and other related provisions, unless the Lenders object to such amendment on or prior to the date that is ten (10) business days after the
date on which such amendment is posted for review by the Lenders. Based on the performance of the Company and its subsidiaries against the KPIs, certain adjustments (increase, decrease or no adjustment) to otherwise applicable pricing will be made; provided that the amount of such adjustments shall not exceed certain aggregate caps as in the definitive loan documentation.
Security and Pledge Agreement
Under the terms of the Security and Pledge Agreement, the Company and TCP, subject to certain permitted encumbrances, as collateral security for the above-stated loans and all other present and future indebtedness of the Company owing to the Lenders grants to BOA, as Administrative Agent for the Lenders, a continuing security interest in certain collateral, which includes the following: (a) all Accounts; (b) all Money; (c) all Chattel Paper; (d) certain Commercial Tort Claims; (e) all Copyrights; (f) all Copyright Licenses; (g) all Deposit Accounts; (h) all Documents; (i) all Equipment; (j) all General Intangibles; (k) all Goods; (l) all Instruments; (m) all Inventory; (n) all Investment Property; (o) all Letter-of-Credit Rights; (p) all Patents; (q) all Patent Licenses; (r) all Pledged Equity; (s) all Software; (t) all Supporting Obligations; (u) all Trademarks; (v) all Trademark Licenses; and (w) all Accessions and all Proceeds of any and all of the foregoing, all as more specifically described and defined in the Security and Pledge Agreement but excluding the Excluded Property (as defined in the Security and Pledge Agreement).
The security interests granted to BOA, as Administrative Agent in the Security and Pledge Agreement for the ratable benefit of the Lenders, secures: (a) the payment and performance of the Obligations; and (b) certain reasonable costs and expenses as more specifically described therein.
Transaction Fees
As a result of the transaction and excluding legal and accounting fees payable as a result of the transaction, the Company incurred closing fees equal to $862,806.23.
All capitalized terms used in this section but not otherwise defined herein shall have the meaning set forth in the Credit Agreement. To the extent not defined herein or in the Credit Agreement, all capitalized terms shall have the meanings provided for by the Uniform Commercial Code.
| Item 1.02 | Termination of a Material Definitive Agreement |
The information set forth under Item 1.01 of this report is incorporated by reference in this Item 1.02.Effective as of May 18, 2022, the following were terminated (or released in the event of (i) below):
| (a) | Fourth Amended and Restated Credit Agreement dated as of November 5, 2019 between the Company, as borrower; Trex Commercial Products, Inc., as guarantor, Bank of America, N.A., as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer; and certain other lenders including Wells Fargo Bank, National Association, who is also Syndication Agent, SunTrust Bank, and Branch Banking and Trust Company arranged by BofA Securities, Inc. as Sole Lead Arranger and Sole Bookrunner. |
| (b) | First Amendment to the Credit Agreement by and among Trex Company, Inc. as borrower; Trex Commercial Products, Inc. as guarantor; Bank of America, N.A. as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer; and certain other lenders including Wells Fargo Bank, National Association, who is also Syndication Agent; Truist Bank; and Regions Bank, arranged by BofA Securities, Inc. as Sole Lead Arranger and Sole Bookrunner dated May 26, 2020. |
| (c) | Fourth Amended and Restated Credit Agreement between the Company, as borrower; Trex Commercial Products, Inc., as guarantor, Bank of America, N.A., as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer; and certain other lenders including Wells Fargo Bank, N.A., who is also Syndication Agent, Truist Bank; and Regions Bank, arranged by BoA Securities, Inc as Sole Lead Arranger and Sole Bookrunner, dated May 26, 2020. |
| (d) | Note dated November 5, 2019 payable by the Company to Bank of America, N.A. in the amount of the lesser of $125,000,000 or the outstanding revolver advances made by Bank of America, N.A. |
| (e) | Note dated November 5, 2019 payable by the Company to Wells Fargo Bank, N.A. in the amount of the lesser of $70,000,000 or the outstanding revolver advances made by Wells Fargo Bank, N.A. |
| (f) | Note dated November 5, 2019 payable by the Company to SunTrust Bank in the amount of the lesser of $30,000,000 or the outstanding revolver advances made by SunTrust Bank. |
| (g) | Note dated November 5, 2019 payable by the Company to Branch Banking and Trust Company in the amount of the lesser of $25,000,000 or the outstanding revolver advances made by Branch Banking and Trust Company. |
| (h) | Note dated May 26, 2020 payable by the Company to Regions Bank. |
| (i) | Fourth Amended and Restated Security and Pledge Agreement dated as of November 5, 2019 between the Company, as debtor, Trex Commercial Products, Inc., as additional obligor; and Bank of America, N.A. as Administrative Agent (including Notices of Grant of Security Interest in Copyrights and Trademarks). |
No material fees were due or owing as a result of the termination or release of the aforementioned agreements.
| Item 9.01 | Financial Statements and Exhibits. |
(c) Trex Company, Inc. herewith files the following exhibits:
| Exhibit No. |
Description | |
| 4.1 | ||
| 4.2 | ||
| 4.3 | ||
| 4.4 | ||
| 4.5 | ||
| 4.6 | ||
| 4.7 | ||
| 104.1 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
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.
| TREX COMPANY, INC. | ||||||
| Date: May 20, 2022 | /s/ Dennis C. Schemm | |||||
| Dennis C. Schemm | ||||||
| Senior Vice President and Chief Financial Officer | ||||||