Item 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION
On April 8, 2016, Albany International Corp. ("the Company")
entered into a $550 million, unsecured Five-Year Revolving Credit Facility Agreement (the "New Agreement") with JPMorgan
Chase Bank, N.A., as Administrative Agent (the “Agent”) and other lenders. JPMorgan Chase Bank, N.A., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC acted as Co-Lead Arrangers and Joint Bookrunners for the
syndication of the New Agreement. The Bank of Tokyo- Mitsubishi UFJ, Ltd. acted as Co-Lead Arrangers, while the Bank of America,
N.A., Wells Fargo Bank, National Association and The Bank of Tokyo-Mitsubishi UFJ, Ltd acted as Co-Syndication Agents. The other
lenders participating in the New Agreement are The Branch Banking and Trust Company and Citizens Bank, N.A. (who acted as Documentation
Agents) as well as TD Bank, N.A., Nordea Bank Finland Plc and First Niagara Bank, N.A. The New Agreement amends and restates a
$400 million five-year facility agreement dated June 18, 2015 (the "Old Agreement"), with the same Agent and many of
the same Lenders.
The New Agreement contains customary terms, as well as affirmative
covenants, negative covenants and events of default comparable to those in the Old Agreement. The Borrowings are guaranteed by
certain of the Company's subsidiaries, including all significant U.S. subsidiaries (subject to certain exceptions),
as were borrowings under the Old Agreement.
The applicable interest rate for borrowings under the New Agreement,
as well as under the Old Agreement, is LIBOR plus a spread, based on the Registrant’s leverage ratio at the time of borrowing.
Spreads under the New Agreement are the same as those under the Old Agreement. The applicable interest rate for borrowings on April
8 was LIBOR plus 150.0 basis points (or 1.95% for a one-month borrowing).
On May 20, 2013 and July 16, 2015 we entered into hedging
transactions that had the effect of fixing the LIBOR portion of the interest rate before addition of the spread on $110
million to $120 million of borrowings drawn, at the rate of 1.414% through March 16, 2018, and 2.43% from that date through
June 16, 2020. These hedging agreements remain in effect for indebtedness drawn under the New Agreement. Under the terms of
these transactions, the Company pays the fixed rate and the counterparties pay a floating rate based on the one-month LIBOR
rate at each quarterly calculation date, which on April 8 was 0.44%. The net effect is to fix the effective interest rate on
$110 million to $120 million of indebtedness at the swap rates, plus the applicable spread, until these swap agreements
expire on June 16, 2020. On April 8, the applicable spread was 150.0 basis points, yielding an effective annual rate of
2.914% on the portion of debt covered by the swaps.
The Agent and certain of the Lenders or their affiliates have from
time to time performed, and may in the future perform, various investment banking, financial advisory and other lending services
for the Company and its affiliates, for which they have received and will receive customary fees.
A copy of the Agreement is being filed as an exhibit. A copy of
the Old Agreement was previously filed as an exhibit to the Company's Current Report on Form 8-K filed June 24, 2015.