NN (NNBR) 8-KNN, Inc. Announces Amendments to Term Loan and Asset Backed Credit Facility

On March 3, 2023, NN, Inc., a Delaware corporation (the “Company”), certain subsidiaries of the Company named therein, the lenders party thereto and Oaktree Fund Administration, LLC (“Oaktree”), as administrative agent, entered into that certain Amendment No. 2 to Term Loan Credit Agreement (the “TLCA Amendment”), which amended the Company's existing Term Loan Credit Agreement, dated as of March 22, 2021 (as previously amended and as amended by the TLCA Amendment, the “Term Loan Credit Agreement”), by and among the Company, the lenders party thereto from time to time, and Oaktree, as administrative agent.

The TLCA Amendment, among other things, (i) increases quarterly maximum Consolidated Net Leverage Ratio (as defined in the Term Loan Credit Agreement) that the Company is required to satisfy, beginning with the fiscal quarter ending March 31, 2023, (ii) incorporates a new $20 million domestic liquidity covenant, which shall be tested quarterly and will be reduced to $15 million if a Junior Capital Condition (as defined in the TLCA Amendment) is met, (iii) includes additional interest, which shall be payable in kind and adjusts depending on the Company achieving certain leverage ratios or whether a Junior Capital Condition is met, (iv) increases the limit on the amount of obligations that may be incurred under Qualified Receivables Transactions (as defined in the Term Loan Credit Agreement) to $30 million in lieu of $20 million, (v) waives the required excess cash flow payment for the fiscal year ended December 31, 2022, and (vi) incorporates customary SOFR-based interest rate components in lieu of existing LIBOR-based floating rates.

Additionally, on March 3, 2023, the Company, certain subsidiaries of the Company named therein, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, entered into that certain Amendment No. 1 to Credit Agreement (the “ABL Amendment” and together with the TLCA Amendment, the “Loan Amendments”), which amended the Company’s existing Credit Agreement, dated as of March 22, 2021 (as amended by the ABL Amendment, the “ABL Credit Agreement”), by and among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

The ABL Amendment, among other things, (i) incorporates a new $20 million domestic liquidity covenant, which shall be tested quarterly and will be reduced to $15 million if a Junior Capital Condition is met, (ii) increases the limit on the amount of obligations under Supplier Financing Agreements (as defined in the ABL Credit Agreement) to $30 million in lieu of $20 million, and (iii) incorporates customary SOFR-based interest rate components in lieu of existing LIBOR-based floating rates.

In connection with the Loan Amendments and in lieu of a material amendment fee otherwise payable in cash, the Company (i) issued to Oaktree and certain of its affiliates pre-funded warrants (the “Warrants”) to purchase, in aggregate of 982,500 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), and (ii) entered into that certain Warrant Letter Agreement, dated March 3, 2023, with Oaktree (the “Warrant Letter Agreement”), which, among other things, obligates the Company to issue Oaktree and certain of its affiliates one or more Warrants to purchase (A) 982,500 shares of Common Stock in the event that the Junior Capital Condition is not met or (B) if the Junior Capital Condition is met, potential additional shares of Common Stock based on the terms of the Junior Capital Contribution as an anti-dilution adjustment.

The Warrants are exercisable, in full or in part, at any time prior to the tenth (10th) anniversary of its issuance, at an exercise price of $0.01 per share, subject to customary anti-dilution adjustments in the event of certain future equity issuances, future subdivisions (by any stock split, recapitalization or otherwise), combinations or similar events, any capital reorganization, reclassification, consolidation or merger, sale of substantially all of the Company’s assets, or other similar transaction of the Company as set forth in the Warrants. The Warrants may be exercised for cash in an amount equal to the aggregate exercise price, or in lieu of paying the aggregate exercise price, the holders of the Warrants may elect a cashless exercise in accordance with the terms of the Warrants.  In connection with a Change of Control transaction, any unexercised shares of Common Stock, underlying the Warrants will be, under certain circumstances, deemed to have been exercised on a cashless basis. Prior to the issuance of shares of Common Stock upon exercise of the Warrants, the Warrant holders are not entitled to vote or receive dividends or be deemed the holder of shares of Common Stock.

The foregoing summaries TLCA Amendment, ABL Amendment, the Warrants and the Warrant Letter Agreement are qualified in their entirety by reference to the full text of the TLCA Amendment, ABL Amendment, the Warrants and the Warrant Letter Agreement, which are filed as Exhibits 4.1, 10.1, 10.2 and 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

The information set forth in Item 1.01 of this Current Report on Form 8-K above is incorporated herein by reference.

The information set forth in Item 1.01 of this Current Report on Form 8-K above is incorporated herein by reference. The Company issued the Warrants and offered the shares of Common Stock underlying the Warrants in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).