Graham Corporation Executes Amended Loan Agreement
01 April 2022 - 7:15AM
Business Wire
Graham Corporation (NYSE: GHM), 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:
- Waiver of the maximum total leverage ratio and minimum fixed
charge coverage requirements through September 30, 2022;
- Reduces availability on the line of credit from $30 million to
$15 million;
- Requires a maximum net loss of not greater than $10 million for
the twelve-month period ending March 31, 2022;
- 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
- 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%.
Jeffrey Glajch, Chief Financial Officer, commented, “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.”
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.
Graham routinely posts news and other important information on
its website, www.graham-mfg.com, where additional comprehensive
information on Graham Corporation and its subsidiaries can be
found.
Safe Harbor Regarding Forward Looking Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are subject to risks, uncertainties and
assumptions and are identified by words such as “expects,”
“anticipates,” “believes,” “will,” “opportunities,” and other
similar words. All statements addressing operating performance,
events, or developments that Graham Corporation expects or
anticipates will occur in the future, including but not limited to,
the evolution and future of the Company and its management, the
Company’s opportunities, the Company’s ability to execute its path
to profitability, and to deliver growth and value to its
shareholders, and its operating strategy are forward-looking
statements. Because they are forward-looking, they should be
evaluated in light of important risk factors and uncertainties.
These risk factors and uncertainties are more fully described in
Graham Corporation’s most recent Annual Report on Form 10-K filed
with the Securities and Exchange Commission, including under the
heading entitled “Risk Factors,” its quarterly reports on Form
10-Q, and other filings it makes with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties
materialize or should any of Graham Corporation’s underlying
assumptions prove incorrect, actual results may vary materially
from those currently anticipated. In addition, undue reliance
should not be placed on Graham Corporation’s forward-looking
statements. Except as required by law, Graham Corporation disclaims
any obligation to update or publicly announce any revisions to any
of the forward-looking statements contained in this news
release.
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version on businesswire.com: https://www.businesswire.com/news/home/20220331005933/en/
For more information, contact investor relations: Deborah
K. Pawlowski Kei Advisors LLC Phone: (716) 843-3908
dpawlowski@keiadvisors.com
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