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HORSEHEAD HOLDING CORP FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Financial Statements and Exhibits

May 1, 2014

Item 1.01 Entry into a Material Definitive Agreement



On April 29, 2014, Zochem, Inc. ("Zochem"), a wholly owned subsidiary of Horsehead Holding Corp. (the "Company"), entered into a new $20.0 million Revolving Credit and Security Agreement (the "2014 Zochem Facility"), as borrower, with PNC Bank, N.A., as agent and lender. The Company also entered into the 2014 Zochem Facility as a guarantor of Zochem's obligations.

The 2014 Zochem Facility replaces the $15.0 million CAD Revolving Credit and Security Agreement that was originally entered into by Zochem on December 21, 2012 with PNC Bank, Canada Branch, as agent and lender. The 2014 Zochem Facility has essentially the same terms as the $15.0 million CAD Revolving Credit and Security Agreement.

The 2014 Zochem Facility provides for a twenty-nine month senior secured revolving credit facility in an aggregate principal amount of up to $20.0 million. The aggregate amount of loans permitted to be made to Zochem under the revolving credit facility may not exceed a borrowing base consisting of the lesser of: (a) $20.0 million, minus the aggregate undrawn amount of outstanding letters of credit, and (b) the sum of a certain portion of eligible accounts receivable and eligible inventory of Zochem, minus the aggregate undrawn amount of outstanding letters of credit and certain availability reserves. Up to an aggregate of $5.0 million will be available to Zochem for the issuance of letters of credit, which reduce availability under the revolving credit facility. Zochem's obligations under the 2014 Zochem Facility are secured by a first priority lien (subject to certain permitted liens) on substantially all of the tangible and intangible assets of Zochem.

Borrowings by Zochem under the 2014 Zochem Facility will bear interest at a rate per annum which, at the option of Zochem, can be either: (a) a domestic rate equal to the "alternate base rate," as determined under the 2014 Zochem Facility, plus an applicable margin of 1.00% based on average undrawn availability, or (b) a CDOR or eurodollar rate" as applicable, plus a margin of 2.50% based on average undrawn availability. Zochem will pay a letter of credit fee to the lenders under the 2014 Zochem Facility of 2.50%, based on average undrawn availability, and a fronting fee to the issuing bank equal to 0.25% per annum on the average daily face amount of each outstanding letter of credit, as well as certain other related charges and expenses.

The 2014 Zochem Facility contains customary events of default. During an event of default, if the agent or lenders holding greater than 66 2/3% of the advances under the facility so elect, the interest rate applied to any outstanding obligations will be equal to the otherwise applicable rate (including the highest applicable margin) plus 2.0% and any letter of credit fees will be increased by 2.0%. Upon (a) the occurrence of an event of default related to the bankruptcy of Zochem or the Company or (b) at the option of lenders holding greater than 66 2/3% of the advances under the facility, the occurrence of any other event of default, all obligations under the 2014 Zochem Facility will become immediately due and payable.

Zochem will pay an unused line fee to the lenders under the 2014 Zochem Facility of 0.75% per annum, based on average undrawn availability, times the amount by which the maximum revolving advance amount exceeds the average daily unpaid balance of revolver loans and undrawn amount of any outstanding letters of credit during any calendar quarter.

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The 2014 Zochem Facility contains a minimum fixed charge coverage ratio of 1.15:1.00 which Horsehead must comply with at the time of any advance request. The 2014 Zochem Facility also contains customary restrictive negative covenants as well as customary reporting and other affirmative covenants.

The description of the 2014 Zochem Facility is not intended to be complete and is qualified in its entirety by the complete text of the 2014 Zochem Facility, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits (d) Exhibits



The list of exhibits in the Exhibit Index to this report is incorporated herein by reference.

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Source: Edgar Glimpses


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