Stepan Company
09/29/2023 | Press release | Distributed by Public on 09/29/2023 15:52
Material Agreement - Form 8-K
Item 1.01 Entry into a Material Definitive Agreement.
Stepan Company ("Stepan") is a party to the following note purchase agreements:
•
a Note Purchase Agreement dated as of September 29, 2005 (as amended through the date hereof, the "2005 NPA"), pursuant to which Stepan issued and has outstanding $9,285,715 in aggregate principal amount of its 4.86% Series 2011-A Senior Notes due November 1, 2023;
•
a Note Purchase Agreement dated as of June 27, 2013 (as amended through the date hereof, the "2013 NPA"), pursuant to which Stepan issued and has outstanding $28,571,425 in aggregate principal amount of its 3.86% Senior Notes due June 27, 2025;
•
a Note Purchase Agreement dated as of July 10, 2015 (as amended through the date hereof, the "2015 NPA"), pursuant to which Stepan issued and has outstanding $57,142,857 in aggregate principal amount of its 3.95% Senior Notes due July 10, 2027;
•
a Note Purchase and Master Note Agreement dated as of June 10, 2021 (the "NYL NPA") pursuant to which Stepan issued and has outstanding (a) $50,000,000 in aggregate principal amount of its 2.37% Senior Notes, Series 2021-B, due September 23, 2028, (b) $50,000,000 in aggregate principal amount of its 2.73% Senior Notes, Series 2021-C, due December 10, 2031 and (c) $25,000,000 in aggregate principal amount of its 2.83% Senior Notes, Series 2022-A, due March 1, 2032; and
•
a Note Purchase and Private Shelf Agreement dated as of June 10, 2021 (the "Prudential NPA") pursuant to which Stepan issued and has outstanding (a) $50,000,000 in aggregate principal amount of its 2.30% Senior Notes, Series 2021-A, due June 10, 2028, (b) $50,000,000 in aggregate principal amount of its 2.73% Senior Notes, Series 2021-D, due December 10, 2031 and (c) $50,000,000 in aggregate principal amount of its 2.83% Senior Notes, Series 2022-B, due March 1, 2032.
On September 29, 2023, Stepan entered into amendments to the 2005 NPA, 2013 NPA 2015 NPA, NYL NPA and Prudential NPA (collectively, the "2023 NPA Amendments") to primarily provide additional covenant flexibility. The 2023 NPA Amendments, among other things:
i.
amend the existing maximum net leverage ratio covenant to require Stepan to maintain the net leverage ratios set forth below for the applicable fiscal quarter:
|
Quarter Ending |
Net Leverage Ratio |
|
September 30, 2023 |
4.00 to 1.00 |
|
December 31, 2023 |
4.00 to 1.00 |
|
March 31, 2024 |
4.00 to 1.00 |
|
June 30, 2024 |
4.00 to 1.00 |
|
September 30, 2024 |
3.75 to 1.00 |
|
December 31, 2024 |
3.75 to 1.00 |
|
March 31, 2025 and each fiscal quarter ending thereafter |
3.50 to 1.00 |
ii.
expand the definition of "Qualified Cash," a metric used to calculate the net leverage ratio, to include, 65% of unrestricted and unencumbered foreign-based cash or permitted investments;
iii.
include a debt rating requirement and, to the extent the relevant notes are rated below investment grade, a rating fee of 0.75% per annum; and
iv.
for the 2005 NPA, 2013 NPA and 2015 NPA, conform certain provisions to the corresponding provisions in the NYL NPA and the Prudential NPA.
On September 29, 2023, Stepan entered into Amendment No. 1 (the "Amendment") to the Credit Agreement, dated as of June 24, 2022, among Stepan, the foreign subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and JPMorgan Chase Bank, N.A. and BofA Securities, Inc., as joint lead arrangers and joint bookrunners (the "Credit Agreement").
The Amendment amends the Credit Agreement to, among other things, (i) provide for a maximum net leverage ratio on substantially the same terms as the corresponding covenant contained in the 2023 NPA Amendments; and (ii) expand the definition of "Qualified Cash," to align with the definition of "Qualified Cash" included in the 2023 NPA Amendments.
The foregoing descriptions of the 2023 NPA Amendments and the Amendment are qualified in their entirety by reference to the full texts of the 2023 NPA Amendments and the Amendment, which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6 hereto and incorporated herein by reference.