Saturday, August 16, 2014

Titan Machinery Bond Hits New YTD Low

Stock: (Stock Research)
Titan Machinery (NASDAQ: TITN) closed yesterday at $13.34 on volume of 140,000 shares. The last time the stock traded this low was on July 22,2010 when it closed @ $13.54.
Titan Machinery FY2014 annual report (10K) .

  •  FY 2014 Net Income declined 79% from $42 million in FY 2013 to $8.8 million for FY 2014.
  •  April 10th announced the closing of 7 construction stores and 1 agriculture location.

Bond:
Titan Machinery (NASDAQ: TITN)
Convertible Bond 3.75%  Maturity:2019.
Closed Week:  $83.19 w 8.11% yield.

Date of Offering : April 18,2012 
Amount of Debt: $150 million Convertible

** Recent Amendments To $150 million indenture

Amendment #3

In the Footnote Exhibit 10.53, terms of Titan Machinery's $150 million convertible note with Wells Fargo is disclosed with Amendments that were made on April 3,2014.





1.1.6    Effective as of the Third Amendment Effective Date, Section 6.12(a) of the Credit Agreement is hereby deleted in its entirety and the following is substituted therefor:
(a)    Consolidated Net Leverage Ratio. Borrower shall maintain, (a) as at the end of each Fiscal Period ending April 30, 2014 through the Fiscal Period ending October 31, 2014, a Consolidated Net Leverage Ratio not greater than 3.25 : 1.00, and (b) as at the end of each Fiscal Period from and after the Fiscal Period ending January 31, 2015, a Consolidated Net Leverage Ratio not greater than 3.00 : 1.00.
1.1.7    Section 6.12(b) of the Credit Agreement is hereby deleted in its entirety and the following is substituted therefor:

(b)    Consolidated Fixed Charge Coverage Ratio. Borrower shall maintain, as at the end of each Fiscal Period, a Consolidated Fixed Charge Coverage Ratio not less than 1.25 : 1.00.

1.1.8    The following is hereby inserted in the Credit Agreement as Section 6.12(c):

(c)    Consolidated Net Income. Borrower shall maintain, (a) as at the end of each Fiscal Period ending January 31, 2014 through the Fiscal Period ending October 31, 2014, for the period consisting of the four consecutive Fiscal Periods ending on such date, a Consolidated Net Income of not less than $5,000,000.00, and (b) as at the end of each Fiscal Period from and after the Fiscal Period ending January 31, 2015, for the period consisting of the four consecutive Fiscal Periods ending on such date, a Consolidated Net Income of not less than $10,000,000.00. For purposes of this Section 6.12(c) only, (a) for all Fiscal Periods through the Fiscal Period ending October 31, 2014, the One-Time Impairment Charge (net of the tax benefit to the extent already included in the determination of Consolidated Net Income) shall be excluded from the calculation of Consolidated Net Income, and (b) for all Fiscal Periods through the Fiscal Period ending October 31, 2014 for that portion of the One-Time Restructuring Charge incurred in the Fiscal Period ending January 31, 2014, and through the Fiscal Period January 31, 2015 for that portion of the One-Time Restructuring Charge incurred in the Fiscal Period ending April 30, 2014, the One-Time Restructuring Charge (net of the tax benefit to the extent already included in the determination of Consolidated Net Income) shall be excluded from the calculation of Consolidated Net Income.


Amendment #2





1.1.5       Effective as of October 31, 2013, Sections 6.12(a) and (b) of the Credit Agreement are hereby deleted in their entirety and the following are substituted therefor:

(a)           Consolidated Net Leverage Ratio.  Borrower shall maintain, (a) as at the end of the Fiscal Period ending October 31, 2013, a Consolidated Net Leverage Ratio not greater than 3.75 : 1.00, (b) as at the end of each Fiscal Period beginning with the Fiscal Period ending January 31, 2014 through the Fiscal Period ending October 31, 2014, a Consolidated Net Leverage Ratio not greater than 3.50 : 1.00, (c) as at the end of the Fiscal Period ending January 31, 2015, a Consolidated Net Leverage Ratio not greater than 3.25 : 1.00, and (d) as at the end of each Fiscal Period from and after the Fiscal Period ending April 30, 2015, a Consolidated Net Leverage Ratio not greater than 3.00 : 1.00.

(b)           Consolidated Fixed Charge Coverage Ratio.  Borrower shall maintain, (a) as at the end of each Fiscal Period beginning with the Fiscal Period ending October 31, 2013 through the Fiscal Period ending January 31, 2014, a Consolidated Fixed Charge Coverage Ratio not less than 1.15 : 1.00, (b) as at the end of each Fiscal Period beginning with the Fiscal Period ending April 30, 2014 through the Fiscal Period ending October 31, 2014, a Consolidated Fixed Charge Coverage Ratio not less than 1.20 : 1.00, and (c) as at the end of each Fiscal Period from and after the Fiscal Period ending January 31, 2015, a Consolidated Fixed Charge Coverage Ratio not less than 1.25 : 1.00.


Amendment #1
  • SECTION 6.12                            FINANCIAL COVENANTS.

    (a)           Consolidated Net Leverage Ratio.  Borrower shall maintain, (a) as at the end of each Fiscal Period beginning with the Fiscal Period ending January 31, 2012 through the Fiscal Period ending January 31, 2014, a Consolidated Net Leverage Ratio not greater than 3.00 : 1.00, and (b) as at the end of each Fiscal Period from and after the Fiscal Period ending April 30, 2014, a Consolidated Net Leverage Ratio not greater than 2.50 : 1.00.

    (b)           Consolidated Fixed Charge Coverage Ratio.  Borrower shall maintain, as at the end of each Fiscal Period ending after the Closing Date, a Consolidated Fixed Charge Coverage Ratio not less than 1.25 : 1.00 for the then trailing twelve month period.

    ******definitions from original indenture:


    Consolidated Fixed Charge Coverage Ratio means, as of the last day of a fiscal quarter, for the period consisting of the four consecutive Fiscal Periods ending on such date, subject to Section 1.02(h), the ratio of:  (a) the sum for such period of (without duplication):  (i) Consolidated EBITDAR; minus (ii) all payments in cash for taxes related to income made by Borrower and its Subsidiaries; minus (iii) Capital Expenditures actually made in cash by Borrower and its Subsidiaries (net of any insurance proceeds, condemnation awards or proceeds relating to any financing with respect to such expenditures); minus (iv) Restricted Payments paid in cash by Borrower; to (b) of:  (i) Consolidated Interest Expense; plus (ii) Consolidated Rent Expense; plus (iii) without duplication, all current maturities of long-term Debt (including with respect to Debt that is a capital lease).

    Consolidated Interest Expense means, for any period, for Borrower and its Subsidiaries on a consolidated basis, the sum of (without duplication):  (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets during such period; plus (b) all payments made under interest rate Swap Contracts during such period to the extent not included in clause (a) of this definition; minus (c) all payments received under interest rate Swap Contracts during such period; plus (d) the portion of rent expense with respect to such period under capital leases that is treated as interest in accordance with GAAP.

    Consolidated Leverage Ratio means, as of any date of determination, the ratio of:  (a)  Consolidated Total Liabilities; to (b) Consolidated Tangible Net Worth.

    Consolidated Net Incomemeans for any period, the sum of net income (or loss) for such period of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP, but excluding any income of any Person if such Person is not a Subsidiary, except that the Borrower’s direct or indirect equity in the net income of any such person for such period shall be included in such Consolidated Net Income in accordance with GAAP.

    Consolidated Net Leverage Ratio means, as of any date of determination, the ratio of:  (a) the sum of (i) Consolidated Total Liabilities, minus (ii) the amount by which Cash Equivalents held by Borrower and its Subsidiaries as of such date of determination exceed $30,000,000; to (b) Consolidated Tangible Net Worth.

    Consolidated Rent Expense means for such period, total rental expenses attributable to operating leases of the Borrower and its Subsidiaries for real property on a consolidated basis.


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