Item 8.01 Other Events.
Amendment to Senior Credit Facility
On September 4, 2020, Flowserve Corporation, a New York corporation (the
"Company"), entered into a first amendment (the "Amendment") to that certain
Credit Agreement, dated as of July 16, 2019, among the Company, Bank of America,
N.A., as administrative agent, and the other lenders party thereto, as
supplemented or otherwise modified from time to time (the "Credit Agreement").
As disclosed in the Company's Form 10-Q for the second quarter of 2020, filed
with the Securities and Exchange Commission on July 30, 2020, the Company had
approximately $1.3 billion of liquidity as of June 30, 2020, consisting of cash
and cash equivalents of $561.7 million and $722.2 million of borrowings
available under our Credit Facility. The Company also stated that it expects to
be able to maintain adequate liquidity over the next 12 months as we manage
through the current market environment in the wake of the COVID-19 pandemic. To
that end, the Company proactively entered into the Amendment to provide greater
flexibility in maintaining adequate liquidity in the event that the need to
access the available borrowings under our Credit Facility should arise.
The Amendment, among other things, (i) replaces the existing leverage ratio
financial covenant (the "Existing Leverage Covenant") with a leverage ratio
financial covenant that requires the Company's ratio of consolidated funded
indebtedness, minus the amount of all cash and cash equivalents on its balance
sheet in excess of $250 million, to the Company's Consolidated EBITDA, not to
exceed 4.00 to 1.00 as of the last day of any quarter through and including
December 31, 2021 (the "Covenant Relief Period"), (ii) amends the Existing
Leverage Covenant to provide that it will not be tested until the quarter ending
March 31, 2022, (iii) provides that the Existing Leverage Covenant, beginning
March 31, 2022, cannot exceed 4.00 to 1.00 (or as increased to 4.50 to 1.00 in
connection with certain acquisitions) and (iv) limits the Company's ability to
pay dividends and repurchase its shares of common stock, par value $1.25, during
the Covenant Relief Period, to an amount not to exceed 115% of the total amount
of dividends and share repurchases we made during the period commencing
January 1, 2019 through and including June 30, 2020.
All other material terms of the Credit Agreement remain the same and are
described in more detail in the Company's Current Report on Form 8-K previously
filed on July 19, 2019, relating to the Credit Agreement.
The foregoing description of the Amendment is qualified in its entirety by
reference to the full text of, and should be read in conjunction with, the
Amendment, a copy of which is filed herewith as Exhibit 10.1 and incorporated
herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
10.1 First Amendment to Credit Agreement, dated September 4, 2020, among
Flowserve Corporation, Bank of America, N.A., as administrative agent,
and the other lenders referred to therein.
104 The cover page from Flowserve Corporation's Current Report on Form
8-K, formatted in Inline XBRL.
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