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ITEM 1.01. | Entry into a Material Definitive Agreement |
On December 14, 2022, Rayonier Inc. (“Rayonier”), Rayonier TRS Holdings Inc. (“TRS”), Rayonier Operating Company LLC (“ROC”) and Rayonier, L.P. (“RLP,” collectively with Rayonier, TRS and ROC, each individually a “Borrower” and collectively, the “Borrowers”) entered into a Fifth Amendment, Incremental Term Loan Agreement and Amendment to Guarantee Agreement (the “Amendment Agreement”) with the several banks, financial institutions and other institutional lenders party thereto (the “Lenders”) and COBANK, ACB, as administrative agent (the “Administrative Agent”), to amend certain terms of the Credit Agreement (as defined below) and to provide a senior unsecured incremental term loan facility to RLP in an aggregate amount of $250 million (the “2022 Incremental Term Loan Facility”) to be advanced by certain Lenders providing commitments under the 2022 Incremental Term Loan Facility, which RLP expects to use for general corporate purposes, including, if applicable, to finance acquisitions and refinance existing debt (including, in each case, fees and expenses in connection therewith).
The periodic interest rate on the 2022 Incremental Term Loan Facility is based, at RLP’s option, on either (1) a Term SOFR or Daily Simple SOFR rate plus a credit spread adjustment of 0.10% plus an applicable margin (currently 1.60%) based on the ratio of consolidated funded debt of Rayonier and its subsidiaries to the sum of the consolidated net worth of Rayonier and its subsidiaries plus the consolidated funded debt of Rayonier and its subsidiaries (the “Leverage Ratio”) or (2) the highest of (a) the prime rate, (b) the federal funds rate plus ½ of 1.00%, and (c) the one-month Term SOFR rate plus a credit spread adjustment of 0.10% plus 1.00%, plus an applicable margin (currently 0.60%) based on the Leverage Ratio. Interest is payable either monthly, quarterly or every one, three, or six months, depending on which type of interest rate is selected by RLP. The 2022 Incremental Term Loan Facility allows for the Borrowers to receive annual patronage payments, which are profit distributions made by a cooperative to its member-users based on the quantity or value of business done with the member-user. Additionally, the interest rates under the 2022 Incremental Term Loan Facility are to be automatically reset on the date that is two and one-half years into the term thereof (which reset may be an increase or decrease) based upon the difference between the cost of funds of the lenders at such time as compared to their cost of funds at the time the 2022 Incremental Term Loan Facility was initially funded similar to certain of the other term loan facilities under the Credit Agreement (as defined below).
All advances made under the 2022 Incremental Term Loan Facility must be repaid by RLP on December 14, 2027. Advances made under the 2022 Incremental Term Loan Facility may be prepaid by RLP, without penalty (other than payment of customary breakage costs for payment of an advance accruing interest at the Term SOFR rate prior to the end of the interest period for such advance), at any time in whole or part.
The 2022 Incremental Term Loan Facility will be subject to the covenants and events of default contained in that certain Credit Agreement entered into among the Borrowers, the Lenders party thereto and the Administrative Agent, dated as of August 5, 2015 (as amended, supplemented or otherwise modified, the “Credit Agreement”). The Credit Agreement contains financial covenants related to leverage and interest coverage, as well as other affirmative and negative covenants relating to, among other things, dividends, liens, mergers, dispositions of timber and timberlands, subsidiary debt, sales and issuances of capital stock of subsidiaries, and affiliate transactions. The Credit Agreement also contains customary events of default. If an event of default occurs and is continuing, the Lenders holding more than 50% of the outstanding amount of the commitments and advances under the credit facilities thereunder may accelerate amounts due under the Credit Agreement (except in the case of a bankruptcy or insolvency event of default, in which case such amounts shall automatically become due and payable).
Additionally, the Amendment Agreement, among other things, replaces LIBOR as the benchmark for interest rates under the Credit Agreement with Term SOFR and/or Daily Simple SOFR (plus, in each case, a credit spread adjustment of 0.10%).
Some of the Lenders and potential lenders under the Credit Agreement (and their respective subsidiaries or affiliates) have in the past provided, and may in the future provide, investment banking, underwriting, lending, commercial banking, trust and
other advisory services to Rayonier and its subsidiaries and affiliates. These parties have received, and may in the future receive, customary compensation from Rayonier and its subsidiaries and affiliates for such services.
For additional information on the Credit Agreement and facilities thereunder, including the terms thereof, see Rayonier’s Current Reports on Form 8-K filed on August 5, 2015, May 2, 2016, April 2, 2020, April 17, 2020 and June 7, 2021. A copy of the Amendment Agreement is filed herewith as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Amendment Agreement in this Form 8-K does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Amendment Agreement.