Item 1.01 Entry into Material Definitive Agreement.
Amendment No. 4 to Third Amended and Restated Credit Agreement
On March 22, 2021, Vector Group Ltd.’s subsidiaries Liggett Group LLC (“Liggett”), 100 Maple LLC (“Maple”) and Vector Tobacco Inc. (“Vector Tobacco”) entered into Amendment No. 4 and Joinder to Third Amended and Restated Credit Agreement (the “Amendment”), which amended the Third Amended and Restated Credit Agreement, dated as of January 14, 2015 (the “Existing Credit Agreement” and as so amended, the “Credit Agreement”), among Liggett, Maple and, upon its accession (as described below), Vector Tobacco, as borrowers, and Wells Fargo Bank, National Association (“Wells Fargo”), as agent and lender. Wells Fargo also serves as trustee under certain of our indentures.
The Amendment amended the Existing Credit Agreement to, among other things, (i) add Vector Tobacco as a borrower under the Credit Agreement, (ii) extend the maturity of the Credit Agreement to March 22, 2026, and (iii) increase the amount of the commitments thereunder from $60 million to $90 million. The obligations under the Credit Agreement continue to be secured on a first priority basis by all inventories, receivables and certain other personal property of Liggett and Maple, a mortgage on Liggett’s manufacturing facility and certain real property of Maple, subject to certain permitted liens. Following the accession of Vector Tobacco as a borrower under the Credit Agreement, the obligations thereunder are also secured on a first priority basis by all inventories, receivables and certain other personal property of Vector Tobacco, subject to certain permitted liens.
Prime rate loans under the Credit Agreement bear interest at a rate equal to the greatest of (i) the Federal Funds rate plus 0.50%, (ii) LIBOR plus 1.0% and (ii) the prime rate of Wells Fargo. LIBOR rate loans under the Credit Agreement bear interest at a rate equal to LIBOR plus 2.25%.
The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit the ability of the borrowers and their subsidiaries to incur, create or assume certain indebtedness, to incur or assume certain liens, to purchase, hold or acquire certain investments, to declare or make certain dividends and distributions and to engage in certain mergers, consolidations and asset sales. The Credit Agreement also requires the borrowers to comply with specified financial covenants, including that EBITDA, as defined under the Credit Agreement, on a trailing twelve-month basis, shall not be less than $150 million if excess availability, as defined under the Credit Agreement, is less than $30 million. The covenants also require that annual capital expenditures, as defined under the Credit Agreement (before a maximum carryover amount of $10 million), shall not exceed $20 million during any fiscal year. The Credit Agreement also contains customary events of default.
As of March 23, 2021, $86.0 million was available for borrowing with no outstanding balance under the Credit Agreement.
The foregoing summary of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, attached hereto as Exhibit 10.1 and incorporated herein by reference.