Item 1.01. Entry into a Material Definitive Agreement.
On July 12, 2018, Spirit AeroSystems Holdings, Inc. (Spirit Holdings or the Company) entered into a $1.26 billion senior unsecured Second Amended and Restated Credit Agreement among Spirit AeroSystems, Inc., as borrower (Spirit or the Borrower), the Company, as parent guarantor, the lenders party thereto, Bank of America, N.A., as administrative agent, and the other agents named therein (the Credit Agreement), consisting of a $800 million revolving credit facility (the Revolver), a $206 million term loan A facility (the Term Loan) and a $250 million delayed draw term loan facility (the Delayed Draw Term Loan). The Credit Agreement refinances and replaces the Amended and Restated Credit Agreement dated as of June 6, 2016, among Spirit, as borrower, the Company, as parent guarantor, the lenders party thereto, Bank of America, N.A., as administrative agent, and the other agents named therein (the Prior Credit Agreement).
Each of the Revolver, the Term Loan and the Delayed Draw Term Loan matures July 12, 2023, and bears interest, at Spirits option, at either LIBOR plus 1.375% or a defined base rate plus 0.375%, subject to adjustment to between LIBOR plus 1.125% and LIBOR plus 1.875% (or between base rate plus 0.125% and base rate plus 0.875%, as applicable) based on changes to Spirits senior unsecured debt rating provided by Standard & Poors Financial Services LLC and/or Moodys Investors Service, Inc. The principal obligations under the Term Loan are to be repaid in equal quarterly installments of $2,578,125, commencing with the fiscal quarter ending March 31, 2019, and with the balance due at maturity of the Term Loan. The principal obligations under the Delayed Draw Term Loan are to be repaid in equal quarterly installments of 1.25% of the outstanding principal amount of the Delayed Draw Term Loan as of March 31, 2019, subject to adjustments for any extension of the availability period of the Delayed Draw Term Loan, with the balance due at maturity of the Delayed Draw Term Loan.
The Delayed Draw Term Loan is available for the Borrower to draw until January 12, 2019, which date may be extended for two additional three-month periods, in each instance subject to the Borrowers payment of a fee to the relevant lenders based on the undrawn Delayed Draw Term Loan commitment.
The Credit Agreement also contains an accordion feature that provides Spirit with the option to increase the Revolver commitments and/or institute one or more additional term loans by an amount not to exceed $750 million in the aggregate, subject to the satisfaction of certain conditions and the participation of the lenders. The Credit Agreement contains customary affirmative and negative covenants, including certain financial covenants that are tested on a quarterly basis. Spirits obligations under the Credit Agreement may be accelerated upon an event of default, which includes non-payment of principal or interest, material breach of a representation or warranty, material breach of a covenant, cross-default to material indebtedness, material judgments, ERISA events, change in control, bankruptcy and invalidity of the guarantee of the Borrowers obligations under the Credit Agreement made by the Company.
Spirit used the proceeds of the new Term Loan to pay off outstanding amounts under the Prior Credit Agreement and the remainder will be used for general corporate purposes.
Certain of the lenders under the Credit Agreement and their affiliates have provided certain commercial banking, financial advisory and investment banking services to the Company and its affiliates in the past and may do so in the future. In addition, The Bank of New York Mellon, one of the lenders under the Credit Agreement, and its affiliates act as the trustee, paying agent and registrar for the Borrowers senior notes and the investment manager for the Companys U.S. defined benefit pension plan. Such parties received, and expect to receive, customary fees and commissions for these services.
The description of the Credit Agreement in this Current Report on Form 8-K does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.