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Item 1.01
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Entry into a Material Definitive Agreement.
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On August 13, 2019, Charah Solutions, Inc. (the “
Company
”) entered into Amendment No. 2 to Credit
Agreement and Waiver (the “
Amendment
”) with Bank of America, N.A. (“
Bank of America
”), as administrative agent, the lenders party thereto and certain subsidiary guarantors named therein pursuant to which, among
other things, the required lenders agreed to waive the Company’s
non-compliance
with the requirement to maintain a consolidated net leverage ratio of 3.75 to 1.00 as of June 30, 2019.
In addition, pursuant to the terms of the Amendment, the Company’s credit agreement was amended to revise the required
financial covenant ratios such that, after giving effect to the Amendment, the Company is not required to comply with any financial covenants through March 30, 2020. After March 30, 2020, the Company will be required to comply with a
consolidated net leverage ratio of 6.50 to 1.00 from March 31, 2020 through September 29, 2020 and decreasing to 3.00 to 1.00 as of September 30, 2020 and thereafter. After giving effect to the Amendment, the Company will also be
required to comply with a fixed charge coverage ratio of 0.75 to 1.00 as of March 31, 2020, 0.90 to 1.00 as of June 30, 2020 and 1.20 to 1.00 thereafter.
As consideration for the accommodations described above, the Company agreed that amounts borrowed pursuant to the delayed draw
commitment will not exceed $15,000 at any one time outstanding (without reducing the overall delayed draw commitment amount). In addition, any loans outstanding pursuant to borrowings under such delayed draw commitment shall incur additional
interest at a rate equal to 10.0% per annum on all amounts outstanding in excess of $10,000. Further, the margin of interest that will be charged on all outstanding loans has been increased to 4.00% for loans based on LIBOR and 3.00% for loans based
on the alternative base rate. The Amendment revised the amount of (i) the commitment fees to 0.35% at all times for unused portions of the Credit Facility and (ii) fees on outstanding letters of credit to 3.35% at all times. The Amendment
also adds a requirement to make two additional scheduled prepayments of outstanding loans under the Company’s credit agreement, including a payment of $50,000 on or before September 13, 2019 and additional payment of $40,000 on or before
March 31, 2020.
The Amendment also includes revisions to the restrictive covenants, including removing certain
exceptions to the restrictions on the Company’s ability to make acquisitions, to make investments and to make dividends or other distributions. After giving effect to the Amendment, the Company will not be permitted to make any distributions or
dividends to its shareholders without the consent of the required lenders.
The summary of the Amendment is qualified in
its entirety by reference to the full text of such agreement, which is attached hereto as Exhibit 10.1 hereto and incorporated herein by reference.
Certain parties to the Amendment and certain of their respective affiliates have performed in the past, and may from time to
time perform in the future, banking, investment banking and/or other advisory services for the Company and its affiliates for which they have received, and/or will receive, customary fees and expenses.