| Item 1.01 |
Entry into a Material Definitive Agreement. |
On July 1, 2022, Landstar System, Inc. (the “Company”) and its wholly-owned subsidiary, Landstar System Holdings, Inc. (“LSHI”), entered into a Second Amended and Restated Credit Agreement among the Company, LSHI, certain subsidiaries of LSHI as subsidiary guarantors, the lenders named therein and JPMorgan Chase Bank, N.A. as administrative agent (the “Restated Credit Agreement”). The Restated Credit Agreement amends and restates the existing amended and restated credit agreement in order to, among other things, (i) increase the size of the facility from $250 million to $300 million (with an “accordion” feature providing for possible increase up to an aggregate amount of $600 million), (ii) extend the termination date to July 2027, (iii) replace the London Interbank Offered Rate as a reference rate used for determining the interest rate applicable to U.S. dollar denominated borrowings under the Restated Credit Agreement with a forward-looking term rate based on the secured overnight financing rate (“Term SOFR”) and (iv) make such other changes in the Restated Credit Agreement as agreed among the Company and the lenders. As of July 1, 2022, there were no outstanding borrowings under the Restated Credit Agreement.
The obligations under the Restated Credit Agreement are guaranteed by substantially all of LSHI’s subsidiaries, subject to certain exceptions more particularly set forth in the Restated Credit Agreement, including the exception set forth in the next succeeding sentence, and are unsecured, other than as noted in the next succeeding sentence. In lieu of any guarantee that would otherwise be required to be provided by certain foreign subsidiaries or domestic subsidiaries that are foreign subsidiary holding companies (as further defined in the Restated Credit Agreement, “FSHCOs”), LSHI and subsidiary guarantors, as applicable, may pledge stock they hold in an amount not exceeding 65% of the voting stock and 100% of the non-voting stock of each such foreign subsidiary or FSHCO. Subsidiaries of LSHI that do not constitute guarantors include two FSHCOs for which the alternative provision of a pledge of stock has been made.
The Restated Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness and the incurrence of operating or capital lease obligations. The Restated Credit Agreement also includes financial condition covenants requiring the Company to maintain a minimum fixed charge coverage ratio and a maximum leverage ratio, in each case, tested as of the last day of each fiscal quarter of the Company as further described in the Restated Credit Agreement.
The Restated Credit Agreement provides for an event of default in the event, among other things, that a person or group acquires 35% or more of the outstanding capital stock of the Company, obtains the power to elect a majority of the Company’s directors, or the directors cease to consist of a majority of Continuing Directors, as defined in the Restated Credit Agreement.
The foregoing description of the Restated Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Restated Credit Agreement, which is attached as Exhibit 10.1 to this report and is incorporated herein by reference.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth above in Item 1.01 is incorporated into Item 2.03 by reference.
| Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits. The following exhibit is filed herewith:
