Section 1.01 Entering into a Material Definitive Agreement.
Information provided in Section 2.03 below relating to the execution of Funding Agreements (as defined below) is incorporated by reference into this Section 1.01.
Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
As indicated previously, the March 15, 2021, Rocky Brands, Inc. and its principal subsidiaries (the “Company”) have entered into (i) an ABL loan and guarantee agreement (the “ABL loan agreement”) with Bank of America, North America. as Sole Principal Arranger and Sole Bookrunner and the other lenders from time to time parties thereto, and (ii) a Loan and Security Agreement (the “Term Loan Agreement”) with
TCW Asset Management Company LLC (as agent for certain term lenders, “TCW”). The ABL Loan Agreement and the Term Loan Agreement, each as amended, are referred to as the “Financing Agreements”. All capitalized terms not otherwise defined herein are defined in the respective funding agreements.
On December 10, 2021the Company entered into a first amendment to the ABL loan agreement resulting in an increase in the revolving credit facility of
$25,000,000 at $175,000,000 for the period of December 10, 2021 at June 10, 2022which would then be reduced to $165,000,000. On June 8, 2022the Company has entered into a second amendment to the ABL Loan Agreement (the “ABL Amendment”), resulting in an increase in the revolving credit facility of
$25,000,000 at $200,000,000 for the period commencing on the date of the ABL Amendment up to and including December 31, 2022which will then be reduced to $175,000,000. After the increase and subsequent decrease, the Company’s uncommitted accordion will be in the amount of $25,000,000.
Moreover, on December 10, 2021the Company and TCW have entered into a First Amendment to the Term Loan Agreement to, among other things, consent to the increase and decrease of the Revolving Credit Facility as described above, amend reporting requirements and adjust the performance pricing grid for the period commencing December 10, 2021 through and including June 10, 2022. Likewise, on
June 8, 2022the Company has entered into a second amendment to the Term Loan Agreement (“Term Loan Amendment”), among other things, to consent to the increase and decrease of the Revolving Credit Facility as described above, and to adjust certain pricing and prepayment conditions.
The term loan amendment provides that the maximum total leverage ratio will be 4.00:1.00 for the quarter ended June 30, 2022and the ABL Amendment and the Term Loan Amendment also provide for certain adjustments to EBITDA with respect to their applicable financial covenants.
The foregoing descriptions of the ABL Amendment and the Term Lending Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the ABL Amendment and the Term Lending Amendment, which are filed as Exhibit 10.1 and Exhibit 10.2, respectively attached.
Item 2.05 Costs associated with exit or disposal activities
On June 7, 2022, the Company announced the completion of a cost savings review aimed at better positioning the Company for profitable growth. Following the integration of the lifestyle footwear business acquired from Honeywell International Inc. in March 2021, the Company has identified a number of operational synergies and cost reduction opportunities. Following this process, the Company approved and implemented a plan, effective June 6, 2022to close his Boston office acquired as part of the transaction and will reduce non-industrial headcount related to the acquired brands by approximately 13% (the “Cost Savings Plan”). As part of the cost savings plan, all other employees remaining at the
Boston office will either be transferred to the registered office of the Company at Nelsonville, Ohio or the transition to remote work. These actions are expected to result in approximately $3.0 – $4.0 million in annualized savings. The Company expects to recognize a one-time severance payment of approximately $1.0 million in the second quarter of 2022 associated with the reduction in the workforce. The actual costs associated with the plan and the workforce reduction may differ from our current expectations and estimates, and such differences may be material.
Section 7.01 Disclosure of FD Regulations
On June 7, 2022, the Company issued a press release announcing the cost savings plan. The full text of the press release is attached as Schedule 99 to this current report on Form 8-K and is incorporated by reference herein. The information contained in this Section 7.01 and Exhibit 99 to this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, unless otherwise expressly stated by specific reference in such filing.
Item 9.01 Financial statements and supporting documents.
Exhibit No. Description
Exhibit 10.1* Second Amendment to ABL Loan and Security Agreement, dated June
8, 2022, between the Company, Bank of America, N.A. and the other
lenders party thereto.
Exhibit 10.2* Second Amendment to Term Loan and Security Agreement, dated
June 8, 2022, between the Company, TCW Asset Management Company
LLC and the other lenders party thereto.
Exhibit 99 Press Release, dated June 7, 2022, entitled "Rocky Brands, Inc.
Announces Completion of Cost Savings Review."
Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL
*Exhibits and Attachments have been omitted in accordance with Rule SK 601(a)(5). The declarant hereby undertakes to provide copies of all annexes or omitted exhibits at the request of the US Securities and Exchange Commission.
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