Chase Corporation entered into a new amended and restated credit agreement with Bank of America, as administrative agent, and with participation from Wells Fargo Bank, PNC Bank and JPMorgan Chase Bank.
The new credit agreement was entered into to amend, restate and extend the Company’s preexisting credit facility, which was previously set to mature on December 15, 2021. Moreover, the agreement provides for additional liquidity to finance acquisitions, working capital and capital expenditures, and for other general corporate purposes. The new agreement increases the Company’s borrowing capabilities to $200 million (up from $150 million under the old facility), with the ability to request an increase in this amount by an additional $100 million at the individual or collective option of any of the lenders (up from $50 million under the old facility).
Adam P. Chase, President and Chief Executive Officer, stated that, “Under this new credit agreement, we obtained an increased revolving credit facility which will continue to position us with adequate debt capital and available cash to execute our inorganic growth plans. In this competitive market, having immediate access to funds gives us an advantage in our acquisition program, putting us in the position to close transactions to fulfill our strategic initiatives. Working with our lenders, led by Bank of America, along with Wells Fargo, PNC and JP Morgan, we have established a great structure to meet our needs going forward.”
Similar to the previous agreement, the applicable interest rate for the new revolving facility and new term loan is based on the effective London Interbank Offered Rate (LIBOR) plus a range of 1.00% to 1.75%, depending on the consolidated net leverage ratio of Chase and its subsidiaries. The new credit agreement has a five-year term with interest payments due at the end of the applicable LIBOR period (but in no event less frequently than the three-month anniversary of the commencement of such LIBOR period) and principal payment due at the expiration of the agreement, July 27, 2026. The new credit agreement contains provisions that may replace LIBOR as the benchmark index under certain circumstances. In addition, the Company may elect a base rate option for all or a portion of the new revolving facility, in which case interest payments shall be due with respect to such portion of the new revolving facility on the last business day of each quarter.
Michael J. Bourque, Treasurer and Chief Financial Officer added that, “Timing in the credit market was favorable so we accelerated our renewal process. We may also elect to convert all or a portion of any balance outstanding on the new revolving facility into a new term loan twice during the term of the new revolving facility giving us maximum flexibility with our debt structure going forward.”