Item 1.01. Entry into a Material Definitive Agreement
On June 6, 2016, Spirit AeroSystems Holdings, Inc. (Spirit Holdings or the Company) entered into a $1.15 billion senior unsecured 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 $650 million revolving credit facility (the Revolver) and a $500 million term loan A facility (the Term Loan). The Credit Agreement refinances and replaces the Credit Agreement dated as of April 18, 2012, among Spirit, as borrower, the Company, as parent guarantor, the subsidiary guarantors identified therein, 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 and the Term Loan matures June 4, 2021 and bears interest, at Spirits option, at either LIBOR plus 1.5% or a defined base rate plus 0.5%, subject to adjustment to between LIBOR plus 1.125% and LIBOR plus 2.0% (or between base rate plus 0.125% and base rate plus 1.0%, 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 $6,250,000, with the balance due at maturity of the Term Loan.
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 $500 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 representation or warranty, material breach of 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, along with approximately $1.5625 million of cash on hand, to pay off outstanding amounts under the Prior Credit Agreement.
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.