XML 39 R24.htm IDEA: XBRL DOCUMENT v3.24.3
Subsequent Events
 6 Months Ended
Oct. 31, 2024
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
Securities Purchase Agreement
On November 1, 2024 (the “Closing Date”), the Company completed an acquisition of Nu Aire. The Company purchased all of the outstanding capital stock of Nu Aire for $55.0 million in the aggregate, subject to certain customary adjustments for debt, cash, transaction expenses and net working capital (the “Transaction”).
Based on the terms of the transaction, $1.0 million of the purchase price is being held in a working capital escrow account to satisfy amounts payable to any party pursuant to certain post-closing true-up mechanisms with respect to cash, debt, transaction expenses and net working capital. In addition, $32.0 million of the purchase price payable at closing of the Transaction was paid in cash, which cash was funded, in part, through the Revolving Credit Facility (as defined below) and Term Loan (as defined below), provided to the Company by PNC Bank, National Association (“PNC”). The remaining $23.0 million of the purchase price payable at closing of the Transaction was funded pursuant to subordinated seller notes (the “Seller Notes”) in an aggregate amount of $23.0 million.
Loan Agreement
On the Closing Date, the Company entered into a Loan Agreement (the “Loan Agreement”) with PNC. The loans governed by the Loan Agreement include (i) a $20.0 million committed senior secured revolving line of credit facility (the “Revolving Credit Facility”), which contains an option to increase the facility upon request by the Company and approval by PNC, in its discretion, by an additional $10.0 million; and (ii) a $15.0 million term loan (the “Term Loan”). The Revolving Credit Facility and Term Loan mature on November 1, 2029. The Revolving Credit Facility and the Term Loan can be paid at any time without penalty.
For the Revolving Credit Facility, the interest rate will be selected by the Company at each advance from one of two options. Option one is a base rate option. Option 2 is a daily secured overnight financing rate. There is an unused fee of 0.15% to 0.25%, determined by the ratio of senior debt to the Company’s EBITDA, of the unused daily balance of the Revolving Credit Facility. For the Term Loan, the principal will be paid in 60 substantially equal monthly installments commencing on the Closing Date. Interest will be paid at the same time and calculated on the outstanding principal balance at an interest rate equal to the rate under Option 2 of the Revolving Credit Facility.
The Loan Agreement has customary reporting covenants. The principal financial covenants require that (1) the Company maintain on a consolidated basis a ratio of senior funded indebtedness to EBITDA of not more than 2.50 to 1.00 and (2) a fixed charge coverage ratio of at least 1.20 to 1.00. The Loan Agreement also contains covenants prohibiting under certain circumstances (1) the incurrence of certain indebtedness, (2) the granting of security interests by the Company to persons other than PNC, (3) the delivery of guaranties for debts of third parties, and (4) certain transactions not in the ordinary course of business.
Seller Notes
As noted above, $23.0 million of the purchase price was paid by the issuance of the Seller Notes entered into by and between the Company and each seller on the Closing Date. The Seller Notes will accrue interest at 8% per annum and will mature on
November 1, 2027, at which time the outstanding principal amount and all unpaid accrued interest will become due and payable by the Company.
The Seller Notes may be prepaid, in full or in part, any time without prepayment penalty, premium, or other fee; subject, however, to each seller’s obligation not to accept any prepayment under the Seller Notes until all Secured Claims (as defined in the Seller Notes) have been paid to PNC. The Company’s obligations under the Seller Notes are secured by a security agreement entered into between the Company and each seller, pursuant to which the sellers have the option to cause the Company to issue shares of the Company’s common stock to the sellers, solely upon the occurrence of an event of default.
The rights of the sellers to receive payments under the Seller Notes are subordinate to the rights of PNC under the Loan Agreement pursuant to a separate subordination agreement that the sellers entered into with PNC on the Closing Date in connection with the Transaction.