Item 8.01 Other Events.
On June 30, 2014, Metalico, Inc. (the "Company") announced an agreement in
principle to restructure the principal balance of its outstanding Convertible
Notes that would defer the Note holders' put right to December 31, 2015. Under
the terms of the Company's original Convertible Notes issued in 2008, Note
holders had a right to require the Company to make full payment of the
outstanding principle balance of $23.4 million and accrued interest under the
Convertible Notes on June 30, 2014. Pursuant to the proposed agreement with the
Note holders, the Company is scheduled to deliver a cash payment of $7 million
and a number of shares of the Company common stock having a value of $5 million
The $7 million cash component would be funded under the Company's existing
senior secured financing agreement. The price per share for the $5 million
equity component would be priced at 85% of the "Note VWAP." "Note VWAP" is
defined as the simple average of the volume weighted average price of the
Company's common stock for a thirty-day trading period including the fifteen
trading days prior to and the fifteen trading days commencing with the date of
execution of definitive documentation (the "Closing Date"). The agreement also
provides for a true-up of the shares in the event the Note holders receive more
or less than their conversion price on dispositions of shares during a
twenty-five-day trading period following the date of issuance.
The Company would retire the remainder of the existing Convertible Notes by
issuing new notes in the aggregate principle amount of the $11.4 million
balance. The new notes would be paid from proceeds of the Company's previously
announced planned divestiture of non-core assets. Two thirds of the new note
balance could be prepaid without penalty if retired by November 30, 2014 and
February 28, 2015, respectively and thereafter would incur an early payment
stock premium if paid from proceeds of asset sales and cash premium if paid from
sources other than asset sale proceeds. The remaining third, or approximately
$3.8 million, could not be called for three years, would be subject to early
payment costs determined by sources of payment, and would be convertible into
shares of Metalico common stock at any time after issuance at a slight premium
to a volume weighted average price of the Company's common stock determined as
of the Closing Date. The other two thirds would become convertible according to
a similar formula as of November 30, 2014 and February 28, 2015, respectively.
The new notes would mature on July 1, 2024 but may be put by the holders at par
on December 31, 2015.
The terms of the restructuring have been approved by the Company's senior
secured lenders, who have also agreed to amend their financing agreement, in
each case, pursuant to the execution of definitive documentation and customary
closing conditions. Modifications would include increases to certain fees and a
resetting of financial covenants to be effected before year end. Applicable
margins for advances under the revolving facility would be reset to 2.5% for
"Base Rate" loans and 3.5% for LIBOR-loans. Applicable margins for advances
under the term facilities would be reset to 8.5% for "Base Rate" loans and 9.5%
for LIBOR-loans. The Company would be required to make prepayments from the
proceeds of certain specified asset sales in accordance with an agreed schedule.
The senior lenders would also receive warrants exercisable at a cost of one cent
per share representing 7.5% of the Company's outstanding equity, subject to
antidilution protection, including the shares of the Company common stock
equivalent to $5 million issued as payment on the existing Convertible Notes.
On June 30, 2014, the Company issued the press release announcing the
above-described agreements in principle attached to this Amended Current Report
on Form 8-K as Exhibit 99.1. The Current Report on Form 8-K filed on June 30,
2014 inadvertently included an earlier draft of the Press Release that was not
the version released.
Item 9.01 Financial Statements and Exhibits.
Press Release issued June 30, 2014
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