BATAVIA, NY–(BUSINESS WIRE)–Graham Corporation (NYSE: GHM), a global company that designs, manufactures and sells critical equipment for the defense/space, power/new energy and chemical/petrochemical industries, today announced the modification of its five-year term loan and line of credit agreement suspending financial covenants until September 30, 2022.
The main terms of the amendment include the following:
Exemption from the maximum total leverage ratio and minimum fixed charge coverage requirements until September 30, 2022;
Reduced line of credit availability from $30 million to $15 million;
Requires a maximum net loss not to exceed $10 million for the twelve month period ending March 31, 2022;
Requires Adjusted EBITDA as defined by the Agreement of at least $2.0 million for the twelve month period ending June 30, 2022, and at least $2.25 million for the twelve month period months ending September 30, 2022; and
Requires a minimum cash requirement of $10 million until the date all financial reports for the fiscal year ending March 31, 2023 are delivered to the bank and $20 million thereafter.
As of March 31, 2022, the Company had no borrowings on its line of credit, down from borrowings of $9.75 million as of December 31, 2021. The balance of its term loan as of March 31, 2022 was 18 .5 million dollars. The amendment did not change the interest rate on the $20 million term loan or line of credit, which remains BSBY plus 1.5%.
Jeffrey Glajch, Chief Financial Officer, said:We believe this amendment gives us the flexibility to implement the changes needed to deliver on our long-term growth plans. Importantly, due to our strong cash generation, we were able to repay approximately $10 million of debt during the three months ended March 31, 2022. We believe this demonstrates that we have sufficient liquidity and are focused on the execution of our plan to increase profitability. .”
Financial covenants will revert to previous requirements beginning with the quarter ending December 31, 2022, including a funded debt leverage to adjusted EBITDA ratio of 3.0 to 1.0 and a fixed charge coverage ratio of at least 1.2 to 1. In addition, pursuant to the Amendment, the Company has agreed not to declare or pay any dividends prior to the date on which all financial reports for the fiscal year ending March 31, 2023 are delivered to the bank and such financial information confirms to the satisfaction of the bank that there is no default at that time, or whether a default would result from such a dividend.
ABOUT THE GRAHAM SOCIETY
Graham is a global company that designs, manufactures and sells critical equipment for the defense/space, power/new energy and chemical/petrochemical industries. Graham and Barber-Nichols’ global brands are backed by world-renowned technical expertise in vacuum and heat transfer, cryogenics and turbomachinery technologies, as well as the company’s responsive and flexible service and unparalleled quality.
Graham regularly posts news and other important information on its website, www.graham-mfg.com, where additional comprehensive information about Graham Corporation and its subsidiaries can be found.
Safe Harbor Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as “expects”, “anticipates”, “believes”, “will”, “opportunities” and other similar words . All statements regarding operational performance, events or developments that Graham Corporation expects or anticipates in the future, including, but not limited to, the growth and future of the Company and its management, opportunities of the Company, the Company’s ability to execute its path to profitability and to deliver growth and value to its shareholders, and its operating strategy are forward-looking statements. Because they are forward-looking, they must be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are described in greater detail in Graham Corporation’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, including under the heading “Risk Factors”, its Quarterly Reports on Form 10-K -Q, and other filings it makes with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should one of Graham Corporation’s underlying assumptions prove incorrect, actual results could differ materially from those currently anticipated. Additionally, undue reliance should not be placed on the forward-looking statements of Graham Corporation. Except as required by law, Graham Corporation disclaims any obligation to update or publicly announce any revision to any of the forward-looking statements contained in this press release.