Power Solutions announces extension to credit agreement

Power Solutions International amended its $130 million uncommitted senior secured revolving credit agreement with Standard Chartered Bank as administrative agent, and the lenders party thereto from time to time. The Third Amended and Restated Credit Agreement extends the maturity date of loans outstanding under its previous credit facility to the earlier of March 22, 2024 or the demand of Standard Chartered. The Third Amended and Restated Credit Agreement is fully drawn as of the date of this release. The Third Amended and Restated Credit Agreement is subject to customary events of default and covenants, including minimum consolidated EBITDA and Consolidated Interest Coverage Ratio covenants for the second and third quarters of 2023. Borrowings under the Third Amended and Restated Credit Agreement will incur interest at either the alternate base rate or the Secured Overnight Financing Rate plus 3.35% per annum. The obligations under the Third Amended and Restated Credit Agreement are unconditionally guaranteed, on a joint and several basis, by certain wholly-owned, existing and subsequently acquired or formed direct and indirect domestic subsidiaries of the Company, subject to customary exceptions. The obligations under the Third Amended and Restated Credit Agreement are secured by substantially all assets of the Company and the Company’s wholly-owned subsidiaries In connection with the Third Amended and Restated Credit Agreement, on March 24, 2023, the Company also amended two of its four separate shareholder’s loan agreements with its majority stockholder, Weichai America, to among other things, extend the maturities thereof. The first shareholder’s loan agreement, which was set to mature on April 24, 2023, provides the Company with a $130.0 million subordinated loan under which Weichai is obligated to advance funds solely for purposes of repaying outstanding borrowings under the Third Amended and Restated Credit Agreement if the Company is unable to pay such borrowings. The fourth shareholder’s loan agreement, which was set to mature on March 31, 2023, provides the Company with a $30 million subordinated loan at the discretion of Weichai. The maturity of the First Shareholder’s Loan Agreement was extended to April 24, 2024 and the maturity of the Fourth Shareholder’s Loan Agreement was extended to March 31, 2024. Borrowings under both agreements will bear interest at an annual rate equal to SOFR plus 4.05% per annum. Further, if the applicable term SOFR is negative, the interest rate per annum shall be deemed as 4.05% per annum. If the interest rate for any loan is lower than Weichai’s borrowing cost, the interest rate for such loan shall be equal to Weichai’s borrowing cost plus 1%. Both of the agreements are subject to customary events of default and covenants. The Company has covenanted to secure any amounts borrowed under either of the agreements upon payment in full of all amounts outstanding under the Third Amended and Restated Credit Agreement. As of March 24, 2023, there were no borrowings under the First Shareholder’s Loan Agreement and approximately $4.8 million drawn under the Fourth Shareholder’s Loan Agreement. The Company is also party to two other loan agreements with Weichai, including the $25 million second amended and restated shareholder’s loan agreement and the $50 million first amended and restated shareholder’s loan agreement. The Second Shareholder’s Loan Agreement will mature on May 20, 2023 and the Third Shareholder’s Loan Agreement will mature on November 30, 2023. The Company intends to work with Weichai to extend both the Second Shareholder’s Loan Agreement and the Third Shareholder’s Loan Agreement as the maturity date approaches. As of March 24, 2023, both the Second Shareholder’s Loan Agreement and the Third Shareholder’s Loan Agreement have been fully drawn.