UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Item 1.01. Entry into a Material Definitive Agreement.
On November 17, 2022, Regal Rexnord Corporation (the “Company”) and Land Newco, Inc. entered into an amendment (the “First Amendment”) with the Company’s lenders under the Second Amended and Restated Credit Agreement, dated as of March 28, 2022 (as amended, the “Credit Agreement”), among the Company, various subsidiaries of the Company from time to time party thereto, the financial institutions from time to time party thereto as lenders and JPMorgan Chase Bank, N.A., as administrative agent. Capitalized terms used but not otherwise defined herein have the meanings ascribed in the Credit Agreement.
Among other things, as more fully set forth therein, the First Amendment (i) permits the consummation of the proposed transaction pursuant to the Agreement and Plan of Merger, among the Company, Aspen Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of the Company, and Altra Industrial Motion Corp. (“Altra”), with respect to a merger of Merger Sub with and into Altra with Altra surviving the merger as a wholly owned subsidiary of the Company (the “Proposed Transaction”) and the incurrence of indebtedness and liens in an aggregate principal amount not to exceed $4,900,000,000 in connection with the Proposed Transaction; (ii) establishes incremental term loan commitments of $600,000,000 (the “Incremental Term Loan Commitments”), to be funded in connection with the closing of the Proposed Transaction, which upon funding will be the same class of term A-1 loans as under the Credit Agreement; (iii) provides an increase of $500,000,000 in the aggregate principal amount of the revolving commitments under the Credit Agreement upon consummation of the Proposed Transaction; (iv) provides an increase in the maximum leverage ratio (defined as, with certain adjustments, the ratio of the Company’s consolidated funded debt to EBITDA) permitted as of the last day of any fiscal quarter commencing after the consummation of the Proposed Transaction to 4.875 to 1.00 with step-downs of such maximum leverage ratio commencing with the fifth fiscal quarter after the consummation of the Proposed Transaction and each fiscal quarter thereafter until returning to a maximum level of 3.75 to 1.00; (v) provides a decrease in the minimum interest coverage ratio permitted as of the last day of any fiscal quarter commencing after the consummation of the Proposed Transaction to 2.75 to 1.00 with an increase back to 3.00 to 1.00 after the sixth full fiscal quarter after the consummation of the Proposed Transaction; (vi) adds an additional level in the pricing schedule to the extent the funded debt to EBITDA ratio is greater than 4.25 to 1.00 which will be applicable upon the consummation of the Proposed Transaction; (vii) amends the synergies and cost-savings EBITDA add-back to include the pro forma impact of synergies and cost-savings prior to the consummation of an acquisition, subject to the applicable cap in the Credit Agreement; (viii) provides an increase to the fixed incremental dollar basket to reflect the increased size of the Company upon consummation of the Proposed Transaction; (ix) adds a “most favored lender” provision allowing for the addition of certain covenants or other provisions related to collateral to the Credit Agreement to the extent such covenants or other provisions are included in the definitive agreements entered into with respect to the indebtedness to be incurred in connection with the Proposed Transaction and (x) adds an event of default to the extent the intercreditor agreement (if then in effect) ceases to be a legally valid, binding and enforceable obligation of the Company or any other loan party to the Credit Agreement.
The effectiveness of the First Amendment automatically reduces to zero the commitments for the “Backstop Facility” described in the Company’s Current Report on Form 8-K filed on October 27, 2022 (the “Prior Form 8-K”). In addition, as a result of the First Amendment, the amount of the commitments for the “Bridge Facility” described in the Prior Form 8-K is reduced on a dollar-for-dollar basis by the amount of the Incremental Term Loan Commitments.
The summary set forth above is not intended to be complete and is qualified in its entirety by reference to the full text of the First Amendment attached hereto as Exhibit 10.1. In the ordinary course of business, certain of the lenders under the Credit Agreement and their affiliates have provided, and may in the future provide, investment banking, commercial banking, cash management, foreign exchange or other financial services to the Company and/or one or more of its subsidiaries for which they have received, and may in the future receive, compensation.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure under Item 1.01 of this report is hereby incorporated by reference.
Item 7.01. Regulation FD Disclosure.
On November 17, 2022, the Company issued a press release announcing the entry into the First Amendment. The press release is filed as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
| (a) | Not Applicable | |
| (b) | Not Applicable | |
| (c) | Not Applicable | |
| (d) | Exhibits. The following exhibits are being furnished herewith: |
Exhibit Index
| Exhibit Number | Exhibit Description | |
| 10.1 | First Amendment, dated as of November 17, 2022, to the Second Amended and Restated Credit Agreement, dated as of March 28, 2022. | |
| 99.1 | Press Release of Regal Rexnord Corporation, issued November 17, 2022. | |
| 104.1 | Cover Page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document). |
SIGNATURES
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.
| REGAL REXNORD CORPORATION | ||
| Date: November 17, 2022 | By: | /s/ Thomas E. Valentyn |
| Thomas E. Valentyn | ||
| Vice President, General Counsel and Secretary | ||