Current Report Filing (8-k)
June 27 2018 - 4:11PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section
13 or 15(d) of
the Securities Exchange
Act of 1934
Date of Report (Date
of earliest event reported): June 22, 2018
BARRETT BUSINESS
SERVICES, INC.
(Exact name of registrant
as specified in charter)
Maryland
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0-21886
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52-0812977
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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8100 N.E. Parkway Drive, Suite 200
Vancouver, Washington
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98662
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including
area code: (360) 828-0700
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:
¨
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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.
The disclosure included under Item 2.03
is incorporated by reference.
Item 2.03. Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On June 22, 2018, Barrett Business Services,
Inc. (the “Company”), finalized a revised credit facility with its principal bank, Wells Fargo Bank, National Association
(the “Lender”), in conjunction with restructuring its workers’ compensation insurance coverage to achieve certain
cost reductions. Under the amended credit arrangements, the Lender has agreed that it or one of its affiliates will issue a standby
letter of credit in the maximum principal amount of $63.7 million (the “Letter of Credit”) for the account of
the Company and the benefit of ACE American Insurance (“ACE Insurance”). When issued, the Letter of Credit will have
an expiration date of July 1, 2019, subject to automatic renewal in specified circumstances. The terms of the revised credit arrangements
are set forth in the Second Amendment (the “Second Amendment”) dated June 20, 2018, to the Amended and Restated Credit
Agreement dated as of June 30, 2017 (the “Credit Agreement”), and related documents executed by the Company and the
Lender.
Under the Second Amendment, the Lender
has been granted a security interest of first priority in certain blocked securities accounts (collectively, the “Collateral
Accounts”). The Company has agreed to deposit in the Collateral Accounts 50% of the Company’s consolidated net income
(after tax and less cash dividends) for each quarter plus, to the extent necessary, an additional amount by May 31 each year so
that the deposits in the Collateral Accounts for the prior year total at least $16 million. The Lender has also been granted a
security interest in accounts receivable and other rights to payment, other accounts, general intangibles, inventory and equipment.
The initial fee payable to the Lender under
the Letter of Credit is equal to 2.5% of the face amount thereof. Upon annual renewal of the Letter of Credit, the fees payable
to the Lender will equal 1.25% of the amounts deposited in the Collateral Accounts plus 2.5% of the outstanding balance of the
face amount of the Letter of Credit in excess of such deposits. The fees will be calculated on an annual basis, payable quarterly
in advance.
The Second Amendment further provides that:
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·
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The
Company’s EBITDA (defined as net profit before taxes plus interest expense (net
of capitalized interest expense), depreciation expense, and amortization expense) on
a rolling four-quarter basis must be not less than $30 million at the end of each fiscal
quarter.
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·
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The
Company may not pay dividends during a fiscal quarter that in the aggregate exceed $0.25
per share (subject to increase by up to 10% each year beginning June 30, 2019).
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The Second Amendment also provides for
additional events of default tied to the potential incurrence of specified liabilities or cross-defaults under the Company’s
workers’ compensation insurance arrangements.
Except as expressly modified by the Second
Amendment, the terms and conditions of the Credit Agreement are unchanged. Such terms and conditions are described in Note 4 to
the Company’s unaudited interim condensed consolidated financial statements included in its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2018, filed by the Company with the Securities and Exchange Commission on May 8, 2018, and incorporated
herein by reference.
The foregoing description of the Second
Amendment is qualified in its entirety by reference to the full text of the Second Amendment, a copy of which is filed as
Exhibit 4.1 to this report and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
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 thereunto duly
authorized.
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BARRETT BUSINESS SERVICES, INC.
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Dated: June 27, 2018
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By:
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/s/ Gary E. Kramer
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Gary E. Kramer
Vice President-Finance, Treasurer and Secretary
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