Form 8-K StarTek, Inc. For: Apr 29
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2015
STARTEK, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE | 1-12793 | 84-1370538 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
8200 E. Maplewood Ave., Suite 100
Greenwood Village, CO 80111
(Address of principal executive offices; zip code)
Registrant’s telephone number, including area code: (303) 262-4500
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On April 29, 2015, StarTek, Inc. (the “Company”) and its U.S. subsidiaries entered into a Credit Agreement (the “Credit Agreement”) with BMO Harris Bank N.A. (the “Administrative Agent”). The Credit Agreement is effective April 29, 2015 through April 29, 2020. The amount the Company may borrow under the Credit Agreement is the lesser of the borrowing base calculation and $50.0 million. So long as no default has occurred and with the Administrative Agent’s consent, the Company may increase the maximum availability to $70.0 million. The Company may request letters of credit under the Credit Agreement in an aggregate amount equal to the lesser of the borrowing base calculation (minus outstanding advances) and $5.0 million. The borrowing base is generally defined as 85% of our eligible accounts receivable less certain reserves as defined in the Credit Agreement.
Borrowings under the Credit Agreement bear interest at one, two, three or six-month LIBOR, as selected by the Company, plus 1.75% to 2.50%, depending on current availability under the Credit Agreement. Until January 1, 2016, the interest rate will be the selected LIBOR plus 1.75%. The Company will pay letter of credit fees equal to the applicable margin (1.75% to 2.50%) times the daily maximum amount available to be drawn under all letters of credit outstanding and a monthly unused fee at a rate per annum of 0.25% on the aggregate unused commitment under the Credit Agreement.
The Company granted the Administrative Agent a security interest in substantially all of its assets, including all cash and cash equivalents, accounts receivable, general intangibles, owned real property, and equipment and fixtures. In addition, under the Credit Agreement, the Company is subject to certain standard affirmative and negative covenants, including the following financial covenants: 1) maintaining a maximum consolidated fixed charge coverage ratio of 1.10 to 1.00 and 2) limiting non-financed capital expenditures during 2015 to $10.5 million and during each fiscal year thereafter during the term to $10.0 million.
Item 1.02 Termination of a Material Definitive Agreement.
On April 29, 2015, the Company terminated its secured revolving credit agreement for a $20.0 million with Wells Fargo Bank, N.A. The agreement was set to expire on February 28, 2016. All amounts owed under this credit agreement were repaid with borrowings under the Credit Agreement in the amount of $9.3 million, which includes a prepayment fee in the amount of $100,000 to terminate the credit agreement prior to maturity.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information under Item 1.01 is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. | ||
99.1 | Press release, dated April 30, 2015, announcing that StarTek, Inc. entered into a new credit facility with BMO Harris Bank. | ||
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STARTEK, INC. | |||
By: | /s/ Lisa A. Weaver | Date: April 30, 2015 | |
Lisa A. Weaver | |||
Senior Vice President, Chief Financial Officer and Treasurer | |||
STARTEK Signs New $50.0 Million Credit Facility with BMO Harris Bank
GREENWOOD VILLAGE, CO — April 30, 2015 - StarTek, Inc. ("STARTEK") (NYSE: SRT), a provider of high-value business process outsourcing services, signed a new five-year, $50.0 million secured revolving credit facility with BMO Harris Bank N.A. on April 29, 2015. The amount the Company may borrow under the revolving credit facility is subject to a borrowing base calculation, with an "accordion" feature to borrow up to $70.0 million in the aggregate. The facility will replace the Company’s $20.0 million secured line of credit with Wells Fargo Bank, N.A. which was set to expire in February 2016. Under the new agreement, the interest rate on borrowings will decrease from LIBOR plus 2.50%-3.00% to LIBOR plus 1.75%-2.25%.
"We believe the new facility is an important component of our capital structure as it addresses our liquidity needs at a more favorable rate," said Chad Carlson, President and CEO of STARTEK. "We look forward to working with the team at BMO Harris as they provide us with the flexibility to fund our growth and execute on our strategic initiatives in the years to come."
About STARTEK
STARTEK is a trusted BPO service provider with comprehensive contact centers around the world. Our employees, whom we call Brand Warriors, are at the forefront of customer care and represent our greatest asset. For over 25 years, these Brand Warriors have been committed to making a positive impact for our clients’ business results, enhancing the customer experience while reducing costs for our clients. With the latest technology in the BPO industry and our STARTEK Advantage System, our Brand Warriors instill customer loyalty through a variety of multi-channel customer interactions, including voice, chat, email and IVR. Our service offerings include sales support, order processing, customer care and receivables management, among others. For more information, please visit www.STARTEK.com.
Forward-Looking Statements
The matters regarding the future discussed in this news release include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions. As described below, such statements are subject to a number of risks and uncertainties that could cause STARTEK's actual results to differ materially from those expressed or implied by any such forward-looking statements. These factors include, but are not limited to, risks relating to our reliance on a limited number of significant customers, lack of minimum purchase requirements in our contracts, the concentration of our business in the communications industry, lack of wide geographic diversity, maximization of capacity utilization, foreign currency exchange risk, risks inherent in the operation of business outside of the United States, ability to hire and retain qualified employees, increases in labor costs, management turnover and retention of key personnel, trends affecting companies’ decisions to outsource non-core services, reliance on technology and computer systems, including investment in and development of new and enhanced technology, increases in the cost of telephone and data services, unauthorized disclosure of confidential client or client customer information or personally identifiable information, compliance with regulations governing protected health information, our ability to acquire and integrate complementary businesses, compliance with our debt covenants, ability of our largest stockholder to affect decisions and stock price volatility. Readers are encouraged to review Item 1A. - Risk Factors and all other disclosures appearing in the Company's Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission, for further information on risks and uncertainties that could affect STARTEK's business, financial condition and results of operation.
Company Contact
Rosemary Hanratty
Vice President of Marketing
303-262-4144
Investor Relations
Liolios Group, Inc.
Cody Slach or Sean Mansouri
949-574-3860
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