UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 10, 2018
SUNCOKE ENERGY, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35243 | 90-0640593 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
1011 Warrenville Road, Suite 600 Lisle, Illinois |
60532 | |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (630) 824-1000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01. | Entry into a Material Definitive Agreement. |
Incremental Term Loan
In order to finance a portion of the repayment of the outstanding 7 5/8% Senior Notes due 2019 of SunCoke Energy, Inc. (the “ Company ”) and to pay related fees and expenses, on January 10, 2018, the Company, as borrower, incurred an incremental term loan in the principal amount of $45,000,000 (the “ Incremental Term Loan ”) pursuant to its existing Amended and Restated Credit Agreement, dated as of May 24, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Company, the several lenders from time to time party thereto and Bank of America, N.A., as administrative agent (the “ Administrative Agent ”). To evidence the existence and certain terms of the Incremental Term Loan, the Company entered into the First Amendment to Credit Agreement (the “ First Amendment ”) with the Administrative Agent. Prior to the incurrence of the Incremental Term Loan, the Credit Agreement provided for a $100 million secured credit facility allowing for the borrowing of revolving loans and, subject to a $50 million sublimit, the issuance of letters of credit (the “ Original Credit Facilities ”).
The Incremental Term Loan is subject to the same terms and conditions as the revolving loans comprising the Original Credit Facilities, with certain changes as are necessary to reflect the term nature of the Incremental Term Loan. Borrowings under the Incremental Term Loan bear interest, at the Company’s option, at a rate per annum equal to either the adjusted Eurodollar Rate (which is the London Interbank Offered Rate (“ LIBOR ”), which cannot be less than zero, adjusted for eurocurrency reserve requirements) for interest periods of one, two, three or six months plus a specified margin, or the Alternate Base Rate, plus a specified margin. The Alternate Base Rate is a fluctuating rate equal to the highest of (a) the Federal Funds Effective Rate (which cannot be less than zero) plus 0.50%, (b) the rate of interest publicly announced from time to time by Bank of America as its “prime rate” and (c) LIBOR plus 1.0%. The specified margin ranges from 0.75% to 1.25% for loans bearing interest at the Alternate Base Rate and from 1.75% to 2.25% for loans bearing interest at the adjusted Eurodollar Rate. The specified margin is calculated based upon the Company’s consolidated total leverage ratio from time to time.
The Incremental Term Loan matures on May 24, 2022. The principal amount of the Incremental Term Loan is payable in quarterly installments of 0.625% through December 2019, 1.875% thereafter through March 2022, with the remaining principal amount payable at maturity in May 2022. Mandatory prepayments also will be required for certain sales of assets, certain events of loss, or incurrence of additional indebtedness not permitted under the Credit Agreement. The Company may voluntarily prepay the Incremental Term Loan in whole or in part at any time without premium or penalty, except that prepayments of any portion of the Incremental Term Loan made on or prior to May 8, 2018 will incur a fee equal to 1.0% of the principal amounts prepaid.
The Incremental Term Loan is guaranteed and secured on the same basis as all obligations under the Credit Agreement. The Credit Agreement contains certain covenants, restrictions and events of default including, but not limited to, limitations on the ability of the Company and its subsidiaries to (i) incur indebtedness, (ii) make distributions, (iii) prepay, redeem or repurchase certain debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates and (viii) consolidate or merge.
The Credit Agreement also contains financial covenants requiring the Company and its consolidated subsidiaries to maintain:
| • | A maximum consolidated total funded debt to EBITDA ratio not to exceed 3.25 to 1.0 for any period of four consecutive fiscal quarters, commencing with the fiscal quarter ending June 30, 2017 and for every fiscal quarter thereafter until the maturity of the Credit Agreement; and |
| • | A minimum EBITDA to interest expense ratio not to be less than 2.75 to 1.0 for any period of four consecutive fiscal quarters, commencing with the fiscal quarter ending June 30, 2017 and for every fiscal quarter thereafter until the maturity of the Credit Agreement. |
If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor.
A copy of the First Amendment is filed as Exhibit 10.1 to this report and is incorporated by reference herein. The foregoing description of the First Amendment is qualified in its entirety by reference to the actual terms of the First Amendment.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant. |
The information in Item 1.01 of this report is incorporated in this Item 2.03 by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SUNCOKE ENERGY, INC. | ||
| By: | /s/ Fay West | |
| Fay West | ||
| Senior Vice President and | ||
| Chief Financial Officer | ||
Date: January 17, 2018
Exhibit 10.1
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of January 10, 2018 (this “ Amendment ”), is entered into among SunCoke Energy, Inc., a Delaware corporation (the “ Borrower ”) and Bank of America, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Credit Agreement (as defined below).
RECITALS
A. The Borrower, the Lenders and the Administrative Agent entered into that certain Amended and Restated Credit Agreement, dated as of May 24, 2017 (as amended or modified, the “ Credit Agreement ”).
B. Pursuant to Section 2.24 of the Credit Agreement, the Borrower has incurred an Incremental Term Loan in the original principal amount of $45,000,000 as more particularly described in that certain Increased Facility Activation Notice of even date herewith.
C. The parties hereto have agreed to amend the Credit Agreement as necessary to reflect the existence and terms of the Incremental Term Loan evidenced by such Increased Facility Activation Notice, and such amendment is permitted to be executed by the Administrative Agent and the Borrower in accordance with Section 2.24(e) of the Credit Agreement.
D. In consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows.
AGREEMENT
1. Amendments to Credit Agreement .
(a) The following new term is hereby added to Section 1.1 of the Credit Agreement in proper alphabetical sequence to read as follows:
““ Initial Incremental Term Loan ” means the Incremental Term Loan implemented pursuant to that certain Increased Facility Activation Notice, dated January 10, 2018.”
(b) The following sentence is added to the end of Section 2.3 of the Credit Agreement to read as follows:
“Furthermore, the Borrower shall repay the remaining outstanding principal amount (if any) of each Incremental Term Loan on the Incremental Term Maturity Date for such Incremental Term Loan.”
(c) A new Section 2.8(c) is hereby added to the Credit Agreement to read as follows:
“(c) Notwithstanding anything to the contrary in Section 2.10 , if, on or prior to May 8, 2018, the Borrower prepays all or any portion of the Initial Incremental Term Loan, then concurrently with such prepayment, the Borrower shall pay to the Administrative Agent, for the ratable account of the Lenders holding the Initial Incremental Term Loan, a fee equal to 1.00% of the principal amount of the Initial Incremental Term Loan so prepaid.”
(d) The following new Section 6.16 is hereby added to the end of Section 6 of the Credit Agreement to read as follows:
“ 6.16 Use of Proceeds of Initial Incremental Term Loan .
The proceeds of the Initial Incremental Term Loan shall be used solely (a) to refinance the Senior Notes and pay fees, premiums, accrued interest, and other transaction expenses in connection therewith and (b) to pay fees, expenses and other transaction expenses incurred in connection with the funding of the Initial Incremental Term Loan, the execution and delivery of the documents related thereto and the transactions contemplated thereby.”
(e) All appearances of the term “Incremental Term Loan Maturity Date” appearing in the Credit Agreement are hereby replaced with the term “Incremental Term Maturity Date”.
2. Effectiveness; Conditions Precedent . This Amendment shall be effective upon receipt by the Administrative Agent of counterparts of this Amendment executed by the Borrower and the Administrative Agent.
3. Counterparts/Telecopy . This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of executed counterparts of this Amendment by telecopy or other secure electronic format (.pdf) shall be effective as an original.
4. GOVERNING LAW . THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
| BORROWER: | SUNCOKE ENERGY, INC., | |||||
| a Delaware corporation | ||||||
| By: | /s/ Fay West | |||||
| Name: | Fay West | |||||
| Title: | Senior Vice President and Chief Financial Officer | |||||
SUNCOKE ENERGY, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
| ADMINISTRATIVE AGENT: | BANK OF AMERICA, N.A., | |||||
| as Administrative Agent | ||||||
| By: | /s/ Erik M. Truette | |||||
| Name: | Erik M. Truette | |||||
| Title: | Vice President | |||||
SUNCOKE ENERGY, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT