UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
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| Item 1.01. | Entry into a Material Definitive Agreement. |
On May 20, 2024, Power Solutions International, Inc. (the “Company” or “PSI”) amended and restated its $25 million shareholder’s loan agreement (the “$25 Million Third Amended and Restated Shareholder’s Loan Agreement”) with its majority stockholder, Weichai America Corp. (“Weichai”), to extend the loan maturity date to May 20, 2025. The $25 million loan under the $25 Million Third Amended and Restated Shareholder’s Loan Agreement has been fully drawn as of the date of this report and is subordinated in all respects to the Company’s existing $50 million senior secured revolving credit facility with Standard Chartered Bank (of which $40 million has been borrowed as of May 20, 2024).
Borrowings under the $25 Million Third Amended and Restated Shareholder’s Loan Agreement will incur interest at the applicable Secured Overnight Financing Rate (“SOFR”), plus 4.05% per annum. Further, if the applicable term SOFR is negative, the interest rate per annum shall be deemed as 4.05% per annum. If the interest rate for any loan under the $25 Million Third Amended and Restated Shareholder’s Loan Agreement is lower than Weichai’s borrowing cost, the interest rate for such loan shall be equal to Weichai’s borrowing cost plus 1%.
The Company previously entered into two separate loan agreements with Weichai, including the $50 million second amended and restated shareholder’s loan agreement (the “$50 Million Second Amended and Restated Shareholder’s Loan Agreement”) on November 29, 2023, and the $30 million second amended and restated shareholder’s loan agreement (the “$30 Million Second Amended and Restated Shareholder’s Loan Agreement”) on March 22, 2024. As of May 20, 2024, PSI had $50 million of borrowings under the $50 Million Second Amended and Restated Shareholder’s Loan Agreement and $19.8 million of borrowings under the $30 Million Second Amended and Restated Shareholder’s Loan Agreement.
The foregoing description of the $25 Million Third Amended and Restated Shareholder’s Loan Agreement is qualified in its entirety by the full text of the $25 Million Third Amended and Restated Shareholder’s Loan Agreement, which is attached hereto as Exhibit 10.1 and incorporated by reference herein.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information included in Item 1.01 of this report is incorporated by reference into this Item 2.03.
| Item 7.01 | Regulation FD Disclosure. |
On May 21, 2024, the Company issued a press release announcing the $25 Million Third Amended and Restated Shareholder’s Loan Agreement, which is attached as Exhibit 99.1 hereto.
The information contained in this Item 7.01 and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by reference in such a filing.
Caution Regarding Forward-Looking Statements
This Form 8-K contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are entitled to the safe-harbor provisions of Section 21E of the Exchange Act. The Company has tried to identify these forward-looking statements by using words such as “anticipate,” “believe,” “budgeted,” “contemplate,” “estimate,” “expect,” “forecast,” “guidance,” “may,” “outlook,” “plan,” “projection,” “should,” “target,” “will,” “would,” or similar expressions, but these words are not the exclusive means for identifying such statements. These statements are subject to a number of risks, uncertainties, and assumptions that may cause actual results, performance or achievements to be materially different from those expressed in, or implied by, such statements.
The Company cautions that the risks, uncertainties and other factors that could cause its actual results to differ materially from those expressed in, or implied by, the forward-looking statements, include, without limitation: the Company’s ability to continue as a going concern; the Company’s ability to raise additional capital when needed and its liquidity; uncertainties around the Company’s ability to meet funding conditions under its financing arrangements and access to capital thereunder; the potential acceleration of the maturity at
any time of the loans under the Company’s uncommitted senior secured revolving credit facility through the exercise by Standard Chartered Bank of its demand right; the impact of rising interest rates; changes in economic conditions, including inflationary trends in the price of raw materials; our reliance on information technology and the associated risk involving potential security lapses and/or cyber-attacks; variances in non-recurring expenses; risks relating to the substantial costs and diversion of personnel’s attention and resources deployed to address the internal control matters; the Company’s obligations to indemnify past and present directors and officers and certain current and former employees with respect to the investigations conducted by the SEC which will be funded by the Company with its existing cash resources due to the exhaustion of its historical primary directors’ and officers’ insurance coverage; the ability of the Company to accurately forecast sales, and the extent to which sales result in recorded revenues; changes in customer demand for the Company’s products; volatility in oil and gas prices; the impact of U.S. tariffs on imports from China on the Company’s supply chain; impact on the global economy of the war in Ukraine; the impact of supply chain interruptions and raw material shortages; the potential impact of higher warranty costs and the Company’s ability to mitigate such costs; any delays and challenges in recruiting and retaining key employees consistent with the Company’s plans; any negative impacts from delisting of the Company’s common stock par value $0.001 (the “Common Stock”) from the NASDAQ Stock Market (“NASDAQ”) and any delays and challenges in obtaining a re-listing on a stock exchange; and the risks and uncertainties described in reports filed by the Company with the SEC, including without limitation its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and the Company’s subsequent filings with the SEC.
The Company’s forward-looking statements are presented as of the date hereof. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
Exhibit No. |
Description | |
| 10.1 | $25 Million Third Amended and Restated Shareholder’s Loan Agreement, dated as of May 20, 2024, between the Company and Weichai America Corp. | |
| 99.1 | Press Release announcing the $25 Million Third Amended and Restated Shareholder’s Loan Agreement | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| Power Solutions International, Inc. | ||||||
| Dated: May 21, 2024 | By: | /s/ Xun Li | ||||
| Xun Li | ||||||
| Chief Financial Officer | ||||||