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<P id=PARA1 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>UNITED STATES </B></FONT></P>
<P id=PARA2 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P>
<P id=PARA3 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Washington, D.C. 20549 </B></FONT></P>
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<P id=PARA6 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>FORM 8-K</B></FONT></P>
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<P id=PARA8 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>CURRENT REPORT </B></FONT></P>
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<P id=PARA10 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 </B></FONT></P>
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<P id=PARA12 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Date of Report (Date of earliest event reported): February 25, 2016 </B></FONT></P>
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<P id=PARA15 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Sypris Solutions, Inc. </B></FONT></P>
<P id=PARA16 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>(Exact name of registrant as specified in its charter) </B></FONT></P>
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<P id=PARA18 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Delaware</B></FONT></P></TD>
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<P id=PARA19 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>0-24020</B></FONT></P></TD>
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<P id=PARA20 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>61-1321992</B></FONT></P></TD></TR>
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<P id=PARA21 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>(State or Other Jurisdiction</B></FONT></P>
<P id=PARA22 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>of Incorporation)</B></FONT></P></TD>
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<P id=PARA23 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>(Commission</B></FONT></P>
<P id=PARA24 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>File Number)</B></FONT></P></TD>
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<P id=PARA25 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>(I.R.S. Employer</B></FONT></P>
<P id=PARA26 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Identification No.)</B></FONT></P></TD></TR>
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<P id=PARA27 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>101 Bullitt Lane, Suite 450</B></FONT></P>
<P id=PARA28 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Louisville, Kentucky</B></FONT></P></TD>
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<P id=PARA29 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>40222</B></FONT></P></TD></TR>
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<P id=PARA31 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>(Address of Principal</B></FONT></P>
<P id=PARA32 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Executive Offices)</B></FONT></P></TD>
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<P id=PARA34 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Registrant&#8217;s telephone number, including area code: (502) 329-2000</B></FONT></P>
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<P id=PARA37 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing</B></FONT></P>
<P style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>obligation of the registrant under any of the following provisions:</B></FONT></P>
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<P id=PARA39 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>[ &nbsp;] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</B></FONT></P>
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<P id=PARA41 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>[&nbsp; ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</B></FONT></P>
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<P id=PARA43 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>[&nbsp; ]&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</B></FONT></P>
<P id=PARA44 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA45 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>[&nbsp; ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</B></FONT></P>
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<P id=PARA49 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 1.01 Entry into a Material Definitive Agreement</B></FONT></P>
<P id=PARA50 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA51 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">As previously announced, on October 30, 2015, Sypris Solutions, Inc. (the &#8220;Company&#8221;) entered into two new financing arrangements consisting of (1) an Amended and Restated Loan and Security Agreement (&#8220;Revolving Credit Agreement&#8221;) with Siena Lending Group LLC (&#8220;Siena&#8221;) providing for principal borrowings of up to $15,000,000 on a revolving basis and (2) a Loan and Security Agreement (the &#8220;Term Loan Credit Agreement&#8221;) with Great Rock Capital Partners Management, LLC (&#8220;Great Rock&#8221;) providing for a term loan in the principal amount of $12,000,000 (&#8220;Term Loan&#8221;). </FONT></P>
<P id=PARA52 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA53 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On February 25, 2016, the Company entered into (1) an amendment (the &#8220;Term Loan Amendment&#8221;) to the Term Loan Credit Agreement with Great Rock and (2) an amendment (the &#8220;Revolving Loan Amendment&#8221;) to the Revolving Credit Agreement with Siena (together, the &#8220;Amendments&#8221;). The Amendments will have the effect, among other things, of increasing the Company&#8217;s borrowing capability under its Revolving Credit Agreement and providing for an agreement on use of proceeds from the sale of its Toluca, Mexico property and buildings, as described below. As part of the Amendments, the Company also received an additional $1,000,000 subordinated loan from Gill Family Capital Management, Inc. (&#8220;Gill Family Capital Management&#8221;), as described below. </FONT></P>
<P id=PARA54 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA55 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Revolving Loan Amendment and the Term Loan Amendment</B></FONT></P>
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<P id=PARA57 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">As a result of the Term Loan Amendment, the Company will deposit $6,000,000 of the proceeds of the sale-leaseback of its Toluca, Mexico property and buildings (the &#8220;Toluca Sale-Leaseback&#8221;) into a Cash Collateral Account, to be held for one year as additional collateral for the Term Loan. Amounts deposited in the Cash Collateral Account that are used to prepay the principal of the Term Loan must be accompanied by the payment of a make-whole amount by the Company equal to the present value of any unpaid interest that would have been paid on the prepaid portion of the Term Loan through the one year anniversary of the Term Loan Amendment.</FONT></P>
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<P id=PARA59 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Term Loan Amendment further provides that the Company will be permitted to retain the remaining balance of the proceeds from Toluca Sale-Leaseback, and increases the interest rate of the Term Loan from 12.5% to 13.5%. </FONT></P>
<P id=PARA60 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA61 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In addition, under the Term Loan Amendment and Revolving Loan Amendment, each of Siena and Great Rock agreed to reduce the Company&#8217;s minimum excess availability requirement from $4 million to $3 million. Siena further agreed to remove certain reserves which were counted against the Company&#8217;s &#8220;borrowing base.&#8221; These changes are estimated to provide the Company with $1,655,000 in additional borrowing capacity under the Revolving Credit Agreement. </FONT></P>
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<P id=PARA63 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In connection with the Amendments, the Company has retained a financial advisor to review the Company&#8217;s existing business plan and make recommendations in the form of a revised&nbsp;business plan, to be completed by March 7, 2016. If the Company meets certain milestones as determined by Great Rock after its review of such plan, up to $1,000,000 may be released from the Cash Collateral Account to the Company. The Company&#8217;s obligations under each of the Revolving Credit Agreement and the Term Loan Credit Agreement, as amended, continue to be guaranteed by the Company&#8217;s U.S. subsidiaries and are secured by a first priority lien on substantially all assets of the Company and the guarantors. Each of the Revolving Loan Amendment and the Term Loan Amendment contains certain customary representations, warranties and covenants. </FONT></P>
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<P id=PARA65 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In connection with the execution of the Revolving Loan Amendment and Term Loan Amendment, the Company agreed to pay a fee of $100,000 to Siena and a fee of $120,000 to Great Rock. The Company also agreed to increase the Collateral Monitoring Fee it pays to Great Rock from $144,000 to $346,000 and to increase certain early prepayment or termination fees payable in connection with the Term Loan Credit Agreement. </FONT></P>
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<P style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Gill Family Investment </B></FONT></P>
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<P id=PARA69 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In connection with the Revolving Loan Amendment and Term Loan Amendment, the Company received the proceeds of a $1,000,000 subordinated loan (the &#8220;Loan&#8221;) from Gill Family Capital Management, an entity controlled by the Company&#8217;s president and chief executive officer, Jeffrey T. Gill and one of its directors, R. Scott Gill. The Loan increases the aggregate amount previously loaned by Gill Family Capital Management to the Company from $5,500,000 to $6,500,000. A promissory note (the &#8220;Promissory Note&#8221;) previously issued by the Company in favor of Gill Family Capital Management and certain related security agreements were amended by increasing the principal amount from $5,500,000 to $6,500,000. All principal and interest on the Promissory Note will be due and payable at maturity on January 30, 2019. All other terms of the original Promissory Note remain in place. </FONT></P>
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<P id=PARA71 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Promissory Note is secured by certain assets of the Company, including its patents and trademarks and certain of the Company&#39;s real property. The Promissory Note, including the security interest held by Gill Family Capital Management, is subordinate to the lenders&#8217; rights and obligations under the Revolving Credit Agreement and the Term Loan Credit Agreement as set forth in certain subordination agreements entered into between Gill Family Capital Management and each of Siena and Great Rock.</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"> </FONT></P>
<P id=PARA72 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA73 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The entry into the original Promissory Note and the related agreements was previously disclosed in the Company&#8217;s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2015. The original Promissory Note dated March 12, 2015 was also filed as an exhibit to the Company&#8217;s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2015, and the subsequent first amendment to the Promissory Note dated June 11, 2015 was filed as an exhibit to the Company&#8217;s Quarterly Report on Form 10-Q dated August 19, 2015. A second amendment to the Promissory Note was reported on Form 8-K filed on November 3, 2015, reporting the extension of the maturity date to January 30, 2019.</FONT></P>
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<P id=PARA75 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 2.03 Creation of a Direct Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant </B></FONT></P>
<P id=PARA76 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA77 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The disclosure contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.&nbsp;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
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<P id=PARA82 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>SIGNATURES </B></FONT></P>
<P id=PARA83 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
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<P id=PARA88 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Dated: March 2, 2016 </FONT></P></TD>
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<P id=PARA89 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Sypris Solutions, Inc.</B></FONT></P></TD></TR>
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<P id=PARA97 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">By:</FONT></P></TD>
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<P id=PARA98 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">/<U>s/ John R. McGeeney</U></FONT></P></TD></TR>
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<P id=PARA102 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P></TD>
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<P id=PARA103 style="TEXT-ALIGN: left; MARGIN: 0pt 0pt 0pt 12.2pt; LINE-HEIGHT: 1.25; TEXT-INDENT: -12.25pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">John R. McGeeney</FONT></P>
<P id=PARA104 style="TEXT-ALIGN: left; MARGIN: 0pt 0pt 0pt 12.2pt; LINE-HEIGHT: 1.25; TEXT-INDENT: -12.25pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Vice President, General Counsel and Secretary</FONT></P></TD></TR></TABLE>
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sypr20160302_8k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2016
Sypris Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware
0-24020
61-1321992
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
101 Bullitt Lane, Suite 450
Louisville, Kentucky
40222
(Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (502) 329-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
As previously announced, on October 30, 2015, Sypris Solutions, Inc. (the "Company") entered into two new financing arrangements consisting of (1) an Amended and Restated Loan and Security Agreement ("Revolving Credit Agreement") with Siena Lending Group LLC ("Siena") providing for principal borrowings of up to $15,000,000 on a revolving basis and (2) a Loan and Security Agreement (the "Term Loan Credit Agreement") with Great Rock Capital Partners Management, LLC ("Great Rock") providing for a term loan in the principal amount of $12,000,000 ("Term Loan").
On February 25, 2016, the Company entered into (1) an amendment (the "Term Loan Amendment") to the Term Loan Credit Agreement with Great Rock and (2) an amendment (the "Revolving Loan Amendment") to the Revolving Credit Agreement with Siena (together, the "Amendments"). The Amendments will have the effect, among other things, of increasing the Company's borrowing capability under its Revolving Credit Agreement and providing for an agreement on use of proceeds from the sale of its Toluca, Mexico property and buildings, as described below. As part of the Amendments, the Company also received an additional $1,000,000 subordinated loan from Gill Family Capital Management, Inc. ("Gill Family Capital Management"), as described below.
Revolving Loan Amendment and the Term Loan Amendment
As a result of the Term Loan Amendment, the Company will deposit $6,000,000 of the proceeds of the sale-leaseback of its Toluca, Mexico property and buildings (the "Toluca Sale-Leaseback") into a Cash Collateral Account, to be held for one year as additional collateral for the Term Loan. Amounts deposited in the Cash Collateral Account that are used to prepay the principal of the Term Loan must be accompanied by the payment of a make-whole amount by the Company equal to the present value of any unpaid interest that would have been paid on the prepaid portion of the Term Loan through the one year anniversary of the Term Loan Amendment.
The Term Loan Amendment further provides that the Company will be permitted to retain the remaining balance of the proceeds from Toluca Sale-Leaseback, and increases the interest rate of the Term Loan from 12.5% to 13.5%.
In addition, under the Term Loan Amendment and Revolving Loan Amendment, each of Siena and Great Rock agreed to reduce the Company's minimum excess availability requirement from $4 million to $3 million. Siena further agreed to remove certain reserves which were counted against the Company's "borrowing base." These changes are estimated to provide the Company with $1,655,000 in additional borrowing capacity under the Revolving Credit Agreement.
In connection with the Amendments, the Company has retained a financial advisor to review the Company's existing business plan and make recommendations in the form of a revised business plan, to be completed by March 7, 2016. If the Company meets certain milestones as determined by Great Rock after its review of such plan, up to $1,000,000 may be released from the Cash Collateral Account to the Company. The Company's obligations under each of the Revolving Credit Agreement and the Term Loan Credit Agreement, as amended, continue to be guaranteed by the Company's U.S. subsidiaries and are secured by a first priority lien on substantially all assets of the Company and the guarantors. Each of the Revolving Loan Amendment and the Term Loan Amendment contains certain customary representations, warranties and covenants.
In connection with the execution of the Revolving Loan Amendment and Term Loan Amendment, the Company agreed to pay a fee of $100,000 to Siena and a fee of $120,000 to Great Rock. The Company also agreed to increase the Collateral Monitoring Fee it pays to Great Rock from $144,000 to $346,000 and to increase certain early prepayment or termination fees payable in connection with the Term Loan Credit Agreement.
Gill Family Investment
In connection with the Revolving Loan Amendment and Term Loan Amendment, the Company received the proceeds of a $1,000,000 subordinated loan (the "Loan") from Gill Family Capital Management, an entity controlled by the Company's president and chief executive officer, Jeffrey T. Gill and one of its directors, R. Scott Gill. The Loan increases the aggregate amount previously loaned by Gill Family Capital Management to the Company from $5,500,000 to $6,500,000. A promissory note (the "Promissory Note") previously issued by the Company in favor of Gill Family Capital Management and certain related security agreements were amended by increasing the principal amount from $5,500,000 to $6,500,000. All principal and interest on the Promissory Note will be due and payable at maturity on January 30, 2019. All other terms of the original Promissory Note remain in place.
The Promissory Note is secured by certain assets of the Company, including its patents and trademarks and certain of the Company's real property. The Promissory Note, including the security interest held by Gill Family Capital Management, is subordinate to the lenders' rights and obligations under the Revolving Credit Agreement and the Term Loan Credit Agreement as set forth in certain subordination agreements entered into between Gill Family Capital Management and each of Siena and Great Rock.
The entry into the original Promissory Note and the related agreements was previously disclosed in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2015. The original Promissory Note dated March 12, 2015 was also filed as an exhibit to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2015, and the subsequent first amendment to the Promissory Note dated June 11, 2015 was filed as an exhibit to the Company's Quarterly Report on Form 10-Q dated August 19, 2015. A second amendment to the Promissory Note was reported on Form 8-K filed on November 3, 2015, reporting the extension of the maturity date to January 30, 2019.
Item 2.03 Creation of a Direct Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The disclosure contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 2, 2016
Sypris Solutions, Inc.
By:
/
s/ John R. McGeeney
John R. McGeeney
Vice President, General Counsel and Secretary