0000950159-12-000408.txt : 20120712 0000950159-12-000408.hdr.sgml : 20120712 20120712120633 ACCESSION NUMBER: 0000950159-12-000408 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20120706 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120712 DATE AS OF CHANGE: 20120712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECHPRECISION CORP CENTRAL INDEX KEY: 0001328792 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED STRUCTURAL METAL PRODUCTS [3440] IRS NUMBER: 000000000 FISCAL YEAR END: 0313 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51378 FILM NUMBER: 12958972 BUSINESS ADDRESS: STREET 1: 3477 CORPORATE PARKWAY CITY: CENTER VALLEY STATE: PA ZIP: 18034 BUSINESS PHONE: 484-693-1700 MAIL ADDRESS: STREET 1: 3477 CORPORATE PARKWAY CITY: CENTER VALLEY STATE: PA ZIP: 18034 FORMER COMPANY: FORMER CONFORMED NAME: Techprecision CORP DATE OF NAME CHANGE: 20060309 FORMER COMPANY: FORMER CONFORMED NAME: LOUNSBERRY HOLDINGS II INC DATE OF NAME CHANGE: 20050531 8-K 1 techprecision8k.htm TECHPRECISION CORPORATION FORM 8-K techprecision8k.htm
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities and Exchange Act of 1934

Date of Report (Date of earliest reported): July 6, 2012

TECHPRECISION CORPORATION
(Exact Name of Registrant as Specified in Charter)

Delaware
  
000-51378
  
51-0539828
(State  or  Other  Jurisdiction
of Incorporation or Organization)
  
(Commission File Number)
  
(IRS Employer Identification No.)

3477 Corporate Parkway, Suite 140
Center Valley, PA 18034
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (484) 693-1700

Copies to:
 
William A. Scari, Jr.
Pepper Hamilton LLP
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312-1183
Phone: (610) 640-7800
Fax: (610) 640-7835

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 July 6, 2012, TechPrecision Corporation (the “Company”), through its wholly owned subsidiary, Ranor, Inc. (“Ranor”) executed an Eleventh Amendment (the “Amendment”) to the Loan and Security Agreement, dated February 24, 2006, between Sovereign Bank (the “Bank”) and Ranor (as so amended, the “Loan Agreement”).

Under the Amendment, the Company’s failure to comply with financial covenants related to the fixed charge coverage ratio and the interest coverage ratio (collectively referred to herein as the “Coverage Ratio Covenants”) for the fiscal quarter ended March 31, 2012 was waived by the Bank and the Bank waived the need to comply with the Coverage Ratio Covenants for the fiscal quarters ending June 30, 2012 and September 30, 2012.  The Company will now be expected to be  in compliance with all financial covenants starting with the fiscal quarter ending December 31, 2012.  The requirements and testing periods of the Coverage Ratio Covenants will be modified upon resumption of the Company’s need to comply with such covenants at December 31, 2012.

In addition to the suspension and modification of the Coverage Ratio Covenants, a financial covenant related to leverage at the Company will be modified and a new covenant related to the Company’s earnings will be put in place for the quarter ending September 30, 2012.  The Company also agreed to maintain an escrow of $840,000, which amount is equal to two quarters’ worth of debt service payments under the Loan Agreement, until the Company returns to compliance with all financial covenants.  The earliest this could occur is December 31, 2012, the first date the Company will again be subject to all of the financial covenants in the Loan Agreement.

In addition to the financial covenant modifications, the Bank agreed to extend the term of the revolving debt facility under the Loan Agreement to January 31, 2013. Prior to the Amendment, the revolving debt facility was due to expire on July 31, 2012

The foregoing summary of the Amendment is qualified in its entirety by reference to the Amendment, which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated herein by reference.

In addition to the Loan Agreement, the Company, Ranor and the Bank are also parties to the Mortgage Loan and Security Agreement dated December 1, 2010 (“MLSA”) and Ranor and the Bank are parties to an International Swap and Derivatives Association, Inc. 2002 Master Agreement dated December 30, 2010 (“ISDA Master Agreement”).  Both the MLSA and the ISDA Master Agreement were entered into in connection with a tax-exempt bond financing undertaken by the Company to finance expansion of facilities at Ranor.

Item 9.01
Financial Statements and Exhibits.
 
 
(d)
Exhibits
 

 
 
 
 
 
 
 
 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
 
 
Date: July 11, 2012
 
 
 
 
By:              /s/ Richard Fitzgerald
Name:        Richard Fitzgerald
Title:          Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
EXHIBIT INDEX




 
 
 
 
 
EX-10.1 2 ex10-1.htm EXHIBIT 10.1 ex10-1.htm
 
 
 
 
ELEVENTH AMENDMENT TO LOAN AGREEMENT
 
THIS ELEVENTH AMENDMENT TO LOAN AGREEMENT is made as of the 6th day of July, 2012 (the "Agreement"), by and among RANOR, INC., a corporation organized under the State of Delaware with its chief executive office, principal place of business and mailing address at One Bella Drive, Westminster, Massachusetts 01473 (the "Borrower") and SOVEREIGN BANK, N.A., a national banking association (formerly known as Sovereign Bank) with a place of business at 115 Asylum Street, Hartford, Connecticut 06103 (the "Lender").
 
WITNESSETH:
 
WHEREAS, Lender and Borrower entered into a certain loan transaction in the amount of up to $9,000,000.00 as evidenced by a Loan and Security Agreement dated February 24, 2006, as amended from time to time (the "Loan Agreement"); and
 
WHEREAS, the obligations of the Borrower under the Loan Agreement are evidenced by a certain Amended and Restated Revolving Promissory Note in the amount of $2,000,000 (the "Revolving Note") from Borrower to the order of Lender dated as of August 1, 2011, a certain $3,000,000 CapEx Promissory Note dated December 19, 2008 (the "CapEx Note"), a certain $1,900,000 Staged Advance Note dated as of March 29, 2010 from Borrower to Lender (collectively, the "Note"): and
 
WHEREAS, Borrower has requested and Lender has agreed to make certain other modifications to the Loan Agreement as set forth herein.
 
NOW THEREFORE, in consideration of the foregoing, and in consideration of $1.00 and other valuable consideration received to the full satisfaction of the Borrower, the Borrower and the Lender hereby agree as follows:
 
1. The Maturity Date of the Revolving Note is hereby amended and revised to January 31, 2013. All references to the term "Maturity Date" for the Revolving Note in the Loan Agreement shall be deemed to be January 31, 2013.
 
2. Lender hereby waives Borrower's failure to comply with the Fixed Charge Coverage Ratio and the Interest Coverage Ratio covenants at March 31, 2012. The foregoing waiver is on a one-time only basis.
 
3. Lender hereby waives Borrower's covenant to comply with the Interest Coverage Ratio and the Fixed Charge Coverage Ratio for the end of fiscal quarter June 30, 2012. The foregoing is a one-time only basis.
 
4. Lender hereby waives Borrower's covenant to comply with the Interest Coverage Ratio and the Fixed Charge Coverage Ratio for the end of fiscal quarter September 30, 2012. The foregoing is a one-time only basis.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5. Section 5.10 of the Loan Agreement is hereby amended and restated as follows:
 
"5.10.  Financial Covenants. The Borrower hereby covenants that it shall not:
 
(a) Fixed Charge Coverage Ratio. Permit Earnings Available for Fixed Charges to be less than 125% of Fixed Charges. This calculation shall be (i) be measured against the consolidated financial performance with Borrower and its parent, Techprecision Corporation ("Parent"), as set forth in the financial statements required to be delivered to the Lender pursuant to Section 6.5 hereof, which statements shall be prepared on a consolidated basis with the Parent; and (ii) tested on a trailing 6-month basis for the fiscal quarter ended 12/31/2012; a trailing 9-month basis for the fiscal quarter ended 3/31/2013; and quarterly on a trailing 12-month basis at 6/30/2013 and each quarter thereafter.
 
(b)Interest Coverage. Permit the Interest Coverage Ratio to be less than 2:1 as at the end of each fiscal quarter. This calculation shall be (i) be measured against the consolidated financial performance with Borrower and its parent, Techprecision Corporation (-Parent-), as set forth in the financial statements required to be delivered to the Lender pursuant to Section 6.5 hereof, which statements shall be prepared on a consolidated basis with the Parent; and (ii) tested on a trailing 6-month basis for the fiscal quarter ended 12/31/2012; a trailing 9-month basis for the fiscal quarter ended 3/31/2013; and quarterly on a trailing 12-month basis at 6/30/2013 and each quarter thereafter.
 
(c) Leverage Ratio. Borrower will not permit its Leverage Ratio to be greater than 2.0 to 1.0, at any time, tested quarterly.
 
(d) EBIT. Borrower will not permit its EBIT to fall below $1.00 during the standalone fiscal quarter ending September 30, 2012.
 
For the purpose of this Section 5.10, (i) the following definitions shall apply (terms not otherwise defined herein shall have the meaning ascribed to them under GAAP), and (ii) references to the Borrower shall also include the Parent to the extent consolidated with the Parent on the financial statements:
 
"Capital Expenditures" - for any period, the sum of (i) all expenditures that, in accordance with GAAP, are required to be included in land, property, plant or equipment or similar fixed asset account (whether involving real or personal property) and (ii) Capital Lease Obligations incurred during such period (excluding renewals of Capital Leases).
 
"Capital Lease" - any lease of property by Borrower, as lessee, that, in accordance with GAAP, would be capitalized on a balance sheet.
 
"Capital Lease Obligations" - the aggregate capitalized amount of the obligations of Borrower under all Capital Leases.
 
 
 
 
 
 
 
 
 
 
 
 
"Earnings Available for Fixed Charges" - for any period, EBIT plus all amounts deducted in computing net income in respect of depreciation and amortization, less dividends and distributions less non-financed Capital Expenditures less cash taxes paid.
 
"EBIT" means the total of (i) net earnings of Borrower plus (ii) all amounts deducted in computing such net income in respect of (a) interest expense on indebtedness and (b) taxes based upon or measured by income, as each such item is determined in accordance with GAAP.
 
"Fixed Charges-- for any period, the aggregate amount of the Borrower's total interest expense for the period in question, plus scheduled and required payments of principal on long term indebtedness paid or payable for such period, including but not limited to, amounts paid during such period under capital lease and subordinated debt.
 
"GAAP" - means generally accepted accounting principles in the United States of America, as in effect on the date of the preparation and delivery of the financial statements described in Section 6 and consistently followed, without giving effect to any subsequent changes other than changes consented to in writing by the Lender.
 
"Intangible Assets" - means assets that in accordance with GAAP are properly classifiable as intangible assets, including, but not limited to goodwill, franchises, licenses, patents, trademarks, trade names and copyrights.
 
"Interest Coverage Ratio" means for any period, the ratio of EBIT to Borrower's current interest payments due during such period on Indebtedness for borrowed money.
 
"Leverage Ratio" means the ratio of (a) the total liabilities that would be shown on the balance sheet of the Borrower as of any date, to (b) the Borrower's Tangible Net Worth at such date.
 
"Net Worth" means at any date, all amounts that would, in conformity with GAAP be included as shareholders' equity on a balance sheet.
 
6. As inducement for Lender to enter into this Agreement, on the date hereof, Borrower shall pay to Lender a fee equal to $10,000 and the Borrower shall deposit with Lender $840,000 and pledge this account ("$840,000 Cash Collateral Account-) to Lender to secure the Borrower's Obligations. Provided the Borrower satisfies the Financial Covenants at December 31, 2012, and no other default exists under the Loan Documents then the Lender shall release the $840,000 Cash Collateral Account.
 
7. Except as modified herein, the Loan Agreement shall remain in full force and effect.
 
 
[SIGNATURE PAGE FOLLOWS]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IN WITNESS WHEREOF, the Borrower and the Lender have caused this Agreement to be executed as of the date first set forth above.
 
 
 
 
 
 
  LENDER:
   
  SOVEREIGN BANK, N.A.
   
   
  By:  /s/ Todd Mandella
  Todd Mandella
   Its Vice President
   Duly Authorized
   
   
  BORROWER:
   
  RANOR, INC.
   
   
  By:  /s/ Robert Francis
  Robert Francis,
  Its President and General Manager
  Duly Authorized
   
The foregoing has been read and consented to by the following Guarantor:
 
 
TECHPRECISION CORPORATION
f/k/a LOUNSBERRY HOLDINGS II,
INC.
   
   
  By:  /s/ Richard Fitzgerald
  Richard Fitzgerald
  Its Chief Financial Officer
  Duly Authorized