| Item 1.01 | Entry into a Material Definitive Agreement. |
Fourth Amended and Restated Credit Agreement
On March 23, 2023, U.S. Silica Holdings, Inc. (the “Company”), through its subsidiaries, USS Holdings, Inc., as guarantor, U.S. Silica Company (“U.S. Silica”), as borrower, and certain of U.S. Silica’s subsidiaries as additional guarantors (collectively, the “Loan Parties”), entered into the Fourth Amended and Restated Credit Agreement with BNP Paribas, as administrative agent, and the lenders named therein (the “Credit Agreement”). The Credit Agreement is comprised of a new $1.1 billion senior secured credit facility, consisting of a $950 million Term Loan B and a $150 million revolving credit facility that may also be used for swingline loans or letters of credit, and U.S. Silica may elect to increase the term loan or the revolving credit facility as defined in the Credit Agreement. The Company used the net proceeds from the term loan, along with excess cash on the balance sheet, to extinguish $109 million of outstanding debt and for associated refinancing fees. Including this transaction, the Company will have extinguished more than $250 million of long-term debt over the last nine months. The Credit Agreement is secured by substantially all of the assets of U.S. Silica and U.S. Silica’s domestic subsidiaries and a pledge of the equity interests in such entities. The term loan matures on March 23, 2030 and the revolving credit facility commitment expires March 23, 2028.
The proceeds available from the term loan and the revolving credit facility will be available for general corporate purposes, which can be used for acquisitions, investments, dividends, and share repurchases, and for other general corporate purposes. Borrowings under the Credit Agreement will bear interest, as determined at U.S. Silica’s election, at an annual rate based on the Term Secured Overnight Financing Rate plus a credit spread adjustment of 0.10% plus an interest rate margin of 4.75% (subject to 0.5% floor in the case of the term loan and 0% floor in the case of the revolving credit facility) or a base rate plus an interest rate margin of 3.75%. In addition, under the Credit Agreement, U.S. Silica is required to pay a per annum commitment fees to revolving lenders and fees for letters of credit.
U.S. Silica may prepay any term loan or revolving loan in whole or in part at any time, subject to a prepayment premium of 1.0% in the event the term loan is repriced within the twelve months following the closing date of the Credit Agreement.
The Credit Agreement contains covenants that, among other things, govern the ability of the Loan Parties and their subsidiaries to create, incur or assume indebtedness and liens, to make acquisitions or investments, to pay dividends and to sell assets. The Credit Agreement also requires the Loan Parties and their subsidiaries to maintain a consolidated leverage ratio of no more than 4.00:1.00 as of the last day of any fiscal quarter whenever the ratio of the revolving credit facility commitment to usage of the revolving credit facility (other than certain undrawn letters of credit) is less than or equal to 2.85:1.00. These covenants are subject to a number of important exceptions and qualifications. The Credit Agreement includes events of default and other affirmative and negative covenants that are usual for facilities and transactions of this type.
The preceding summary does not purport to be a complete summary of the Credit Agreement and is qualified in its entirety by reference to the Credit Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated by reference herein.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant. |
The information set forth under Item 1.01 under the heading “Fourth Amended and Restated Credit Agreement” is incorporated herein by reference.
