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Wells Fargo Inks $15MM Upsize for ARC Document Solutions

December 23, 2019, 08:00 AM
Filed Under: Office Equipment
Related: Wells Fargo

ARC Document Solutions, LLC, a wholly-owned subsidiary of ARC Document Solutions, Inc., entered into an amendment to its Credit Agreement, initially dated as of November 20, 2014 with Wells Fargo Bank, National Association, as administrative agent (the “Agent”), and the lenders party thereto.

The Amendment increases the maximum aggregate principal amount of revolving loans (“Revolving Loans”) under the Credit Agreement from $65 million to $80 million. Proceeds of a portion of the Revolving Loans available to be drawn under the Credit Agreement were used to fully repay the $49.5 million term loan that was outstanding under the Credit Agreement.

The Amendment reduced the rate of maximum interest rate margin capable of being paid on Revolving Loans under the Credit Agreement by 0.50%. Specifically, London Interbank Offered Rate (LIBOR) loans borrowed under the Credit Agreement will bear interest at a per annum rate equal to the applicable LIBOR rate, plus a margin ranging from 1.25% to 1.75%, based on the Company’s Total Leverage Ratio (as defined in the Credit Agreement). Loans borrowed under the Credit Agreement that are not LIBOR rate loans bear interest at a per annum rate equal to (i) the greatest of (A) the Federal Funds Rate plus 0.50%, (B) the one month LIBOR rate plus 1.00% per annum, and (C) the rate of interest announced, from time to time, by Wells Fargo Bank, National Association as its “prime rate,” plus (ii) a margin ranging from 0.25% to 0.75%, based on the Company’s Total Leverage Ratio.
The Amendment also modified the Total Leverage Ratio the Company is required to maintain under the Credit Agreement by decreasing it from 3.25 to 1.00 to 2.75 to 1.00.

The Amendment also modified certain tests the Company is required to meet in order to pay dividends, repurchase stock and make other restricted payments. In order to make such payments which are permitted subject to certain customary conditions set forth in the Credit Agreement, including compliance with a fixed charge coverage ratio (from which the Company may exclude up to $10 million of such payments that would otherwise constitute fixed charges in any twelve month period), the amount of all such payments will be limited to $15 million during any twelve-month period and the Company must meet a minimum liquidity test of at least $10 million based upon a combination of Revolving Loan availability and unrestricted, unencumbered cash and cash equivalents.

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