ESS Tech, Inc. (NYSE:GWH), a company specializing in miscellaneous electrical machinery and equipment, has entered into a significant financial agreement with the Export-Import Bank of the United States (EXIM). The deal, secured on Monday (NASDAQ:MNDY), involves a secured loan facility totaling up to $22,709,850, which will support the financing of two production lines.
Under the terms of the Credit Agreement, ESS Tech will have access to $20 million for equipment financing, with the remainder allocated for an exposure fee and transaction expenses. The loan, maturing on June 30, 2031, will also assist in the financing of the company’s existing automated battery assembly line and potentially another line contingent upon an equity raise milestone.
Interest on the loan will be charged at the Commercial Interest Reference Rate published by EXIM, with the first payment due on December 30, 2024. Additionally, the company may incur a 0.05% penalty interest surcharge if it fails to meet specific export quotas over three fiscal years.
ESS Tech is obligated to pay a 0.50% annual loan commitment fee on the undrawn balance and an exposure fee of 12.4% on the total borrowings. The repayment schedule sets out nineteen quarterly installments starting December 30, 2026, with full repayment by the maturity date.
The agreement imposes certain covenants on ESS Tech, restricting its ability to grant liens, undergo fundamental changes, and dispose of assets, among other limitations. The company is also expected to meet trailing four-quarter revenue targets starting from the fiscal quarter ending March 31, 2025.
The loan is secured with a first priority interest in the financed equipment and a securities account containing cash or cash equivalents, which will be reported as restricted cash. ESS Tech must maintain a specified amount in this account, which will reduce following the equity raise milestone.
The Credit Agreement includes customary events of default, which, if triggered, could lead EXIM to demand immediate repayment and exercise other rights and remedies. In case of a payment default, an increased default interest rate would apply.
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