Item 1.01 Entry into a Material Definitive Agreement.
On February 28, 2023 (the “Closing Date”), Vertex Aerospace Services Corp. (the “Borrower”), an indirect, wholly owned subsidiary of V2X, Inc. (the “Company”), entered into a credit agreement (the “Credit Agreement”) among the Borrower, Vertex Aerospace Intermediate LLC (“Holdings”), the lenders identified therein and Bank of America, N.A., as administrative agent, collateral agent, swingline lender and letter of credit issuer. The Credit Agreement provides for a $250 million term loan A facility and a $500 million revolving credit facility (collectively, the “Credit Facilities”).
The proceeds of the Credit Facilities drawn on the Closing Date were used by the Borrower, to, among other things, (i) refinance a portion of the Borrower’s existing first lien term B loans outstanding under the First Lien Credit Agreement, dated as of December 6, 2021 (as amended by the Amendment No. 1 to First Lien Credit Agreement, dated as of July 5, 2022, and as further amended, restated, amended and restated, supplemented and otherwise modified from time to time), by and among the Borrower, Holdings, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent, (ii) refinance the loans outstanding under the Second Lien Credit Agreement, dated as of December 6, 2021 (as amended, restated, amended and restated, supplemented and otherwise modified from time to time), by and among the Borrower, Holdings, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent, and (iii) refinance the Borrower’s ABL credit facility outstanding pursuant to the ABL Credit Agreement, dated as of June 29, 2018 (as amended by First Amendment to ABL Credit Agreement dated as of May 17, 2019, Second Amendment to ABL Credit Agreement dated as of May 17, 2021, Third Amendment to ABL Credit Agreement dated as of December 6, 2021, Fourth Amendment to ABL Credit Agreement dated as of July 5, 2022, Fifth Amendment to ABL Credit Agreement dated as of September 21, 2022 and as may be further amended, restated, supplemented or otherwise modified from time to time), by and among the Borrower, Holdings, each lender party thereto, each letter of credit issuer party thereto and Ally Bank, as administrative agent and swingline lender.
The Credit Facilities will mature on February 28, 2028 and are senior secured obligations of the Borrower, secured by substantially all assets of the Borrower and certain of its restricted subsidiaries.
Loans under the Credit Facilities will bear interest at a floating rate, which is, at the Borrower’s option, either (1) a SOFR rate for a specified interest period plus an applicable margin of 2.00% - 3.25%, depending on the consolidated total net leverage ratio of the Borrower and its restricted subsidiaries or (2) a base rate plus an applicable margin of 1.00% - 2.25%, depending on the consolidated total net leverage ratio of the Borrower and its restricted subsidiaries, respectively. The rate applicable to the loans is subject to an interest rate “floor” of 0.0%.
The Credit Agreement includes certain customary affirmative and negative covenants, including limitations on mergers, consolidations and sales of assets, limitations on liens, limitations on certain restricted payments, including investments, limitations on transactions with affiliates and limitations on indebtedness. In addition, the Credit Agreement requires maintenance of (i) a minimum consolidated interest coverage ratio of EBITDA to consolidated interest expense and (ii) a maximum consolidated secured net leverage ratio of EBITDA to consolidated funded secured indebtedness, each on a consolidated basis.
This summary of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.