a global business that designs, manufactures and sells critical equipment for the defense/space, energy/new energy and chemical/petrochemical industries, today announced the amendment to its five-year term loan and line
of credit agreement which suspended the financial covenants through September 30, 2022.
Key terms of the amendment include the following
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Waiver of the maximum total leverage ratio and minimum fixed charge coverage requirements through September 30, 2022;
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Reduces availability on the line of credit from $30 million to $15 million;
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Requires a maximum net loss of not greater than $10 million for the twelve-month period ending March 31, 2022;
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Requires adjusted EBITDA as defined by the agreement of not less than $2.0 million for the twelve-month period ending June 30, 2022, and not less than $2.25 million for the twelve-month period ending September 30, 2022; and
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Requires minimum liquidity of $10 million through the date upon which all financial reporting for the fiscal year ending March 31, 2023 is delivered to the bank and $20 million thereafter.
As of March 31, 2022, the Company had no borrowings on its line of credit, which was down from borrowings of $9.75 million at December 31, 2021. The balance on its term loan at March 31, 2022 was $18.5 million. The amendment did not change the interest rate on the $20 million term loan or line of credit which remains BSBY plus 1.5%.
“We believe this amendment provides us the flexibility to implement the changes needed to drive our long-term growth plans. Importantly, because of our strong cash generation, we were able to pay down approximately $10 million in debt in the quarter ended March 31, 2022. We believe this demonstrates that we have sufficient liquidity, and we are focused on executing our plan to drive profitability.”
Jeffrey Glajch, Chief Financial Officer
Financial covenants will revert to previous requirements effective with the quarter ending December 31, 2022, including a leverage ratio of funded debt to adjusted EBITDA ratio of 3.0 to 1.0 and a fixed charge coverage ratio of at least 1.2 to 1. In addition, pursuant to the amendment, the Company agreed not to declare or pay any dividends prior to the date upon which all financial reporting for the fiscal year ending March 31, 2023 is delivered to the bank and such financial information confirms to the bank's satisfaction that no default exists at such time, or if any default would result from such a dividend.
ABOUT GRAHAM CORPORATION
Graham is a global business that designs, manufactures and sells critical equipment for the defense/space, energy/new energy and chemical/petrochemical industries. The Graham and Barber-Nichols’ global brands are built upon world-renowned engineering expertise in vacuum and heat transfer, cryogenics, and turbomachinery technologies, as well as the Company’s responsive and flexible service and unsurpassed quality.