Navistar (NAV) Enters New $1B Senior Secured Facility

August 23, 2012 4:34 PM EDT
On August 17, 2012, Navistar International Corporation and Navistar, Inc. (NYSE: NAV) signed a definitive credit agreement relating to an up to five-year senior secured, term loan credit facility in an aggregate principal amount of $1,000,000,000 with the Lenders (as defined in the term loan credit agreement), JPMorgan Chase Bank, N.A., as administrative agent and collateral agent for the Lenders, J.P. Morgan Securities LLC and Goldman Sachs Lending Partners LLC, as joint lead arrangers and joint bookrunners, Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint bookrunners, and Goldman Sachs Lending Partners LLC, as syndication agent.

The facility is guaranteed by Navistar International Corporation and fifteen of its subsidiaries, namely, IC Bus, LLC, SST Truck Company LLC, IC Bus of Oklahoma, LLC, Navistar Diesel of Alabama, LLC, Navistar RV, LLC (f/k/a Monaco RV, LLC), Navistar Big Bore Diesels, LLC, Workhorse International Holding Company, Navistar Aftermarket Products, Inc., Continental Mfg. Company, Inc., Indianapolis Casting Corporation, International Truck Intellectual Property Company, LLC, International Engine Intellectual Property Company, LLC, Pure Power Technologies, LLC, Navistar Defense, LLC and UpTime Parts, LLC.

On August 17, 2012, Navistar, Inc. borrowed an aggregate principal amount of $1,000,000,000 under the term loan credit facility, a portion of the proceeds of which were used to repay all outstanding loans under Navistar, Inc.’s existing senior secured, asset-based revolving credit facility entered into on October 18, 2011 and certain other indebtedness and to pay certain fees and expenses incurred in connection with the new term loan credit facility and the remainder of which will be used for ongoing working capital purposes and general corporate purposes. The term loan credit agreement requires quarterly amortization payments of $2,500,000, with the balance due at maturity.

This new term loan credit facility is secured by a first priority security interest in certain assets of the Companies as more fully described in the term loan credit agreement. The term loan credit agreement contains customary provisions for financings of this type, including, without limitation, representations and warranties, affirmative and negative covenants and events of default. Generally, if an event of default occurs and is not cured within any specified grace period, the administrative agent, at the request of (or with the consent of) the lenders holding not less than a majority in principal amount of the outstanding term loans, may declare the term loans to be due and payable immediately. Borrowings by Navistar, Inc. under this facility will accrue interest at a rate equal to a base rate or a Eurodollar rate plus a spread. The spread is 450 basis points for base rate borrowings and 550 basis points for Eurodollar rate borrowings.

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