Shoals Technologies Group, Inc. (NASDAQ: SHLS), a player in the renewable energy sector, has successfully amended its credit agreement, which now includes a new $200 million revolving loan facility. The amendment, carried out with Wilmington Trust and other lenders, introduces favorable changes to the company's borrowing costs and financial covenants.
The agreement, effective as of Monday, revises the terms of the company's existing credit facility. It reduces the interest rate margin by at least 0.25% for revolving loans, with potential further reductions tied to the company's leverage ratio. Moreover, the commitment fee on undrawn loans is lowered by at least 0.10%, with extra step-downs possible if leverage ratios remain below specified thresholds.
This amendment also decreases the maximum consolidated first lien secured leverage ratio, setting it at 4.25:1.00 from April 1, 2024, through March 31, 2025, and thereafter at 4.00:1.00. These ratios could temporarily increase if the company makes a material acquisition.
Furthermore, the maturity date for the revolving loans has been extended to March 19, 2029, marking the fifth anniversary of the amendment's effective date. The new 2024 Revolving Loans will replace the existing revolving loans and can be prepaid at any time without incurring penalties.
On the day the amendment took effect, the interest rates for the new loans were set at either adjusted term SOFR or base rate plus a margin of 2.50% per annum for SOFR loans and 1.50% per annum for base rate loans.
The restructuring of the credit agreement is a strategic move by Shoals Technologies to improve its financial flexibility and reduce borrowing costs, which could potentially enhance its ability to invest in its core business operations.
This financial maneuver is based on a press release statement and reflects the company's latest steps to optimize its capital structure amidst the evolving landscape of the renewable energy industry.
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