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

July 8, 2014



Item 1.01 Entry into a Material Definitive Agreement

As the Company previously disclosed in Current Reports on Form 8-K dated January 23, April 1 and June 4, 2014, the Company and Ranor, were parties to: (i) a Forbearance and Modification Agreement with Santander Bank, N.A. (formerly Sovereign Bank) (the "Bank") dated January 16, 2014 (the "First Forbearance Agreement") and (ii) a Forbearance and Modification Agreement with the Bank dated May 30, 2014 (the "Second Forbearance Agreement"), each in connection with the Loan and Security Agreement, dated as of February 24, 2006, between Ranor and Sovereign Bank, as supplemented and amended (the "Loan Agreement"). Under the First Forbearance Agreement, the Bank agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company's non-compliance with certain financial covenants under the Loan Agreement until March 31, 2014. On March 31, 2014, the First Forbearance Agreement terminated pursuant to its terms. Under the Second Forbearance Agreement, the Bank agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company's non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014.

On July 1, 2014, the Company and the Bank entered into a new forbearance and modification agreement with the Bank (the "Third Forbearance Agreement"). Under the Third Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies (but not waive such rights and remedies) arising as a result of the Company's non-compliance with certain financial covenants under the Loan Agreement commencing on July 1, 2014 and extending until no later than July 31, 2014 (the "Forbearance Period").

The Loan Agreement consists of a secured term loan of $4.0 million, a revolving line of credit of $2.0 million and a capital expenditure line of credit facility of $3.0 million. Additionally, the Bank extended to the Company a loan facility in the amount of up to $1.9 million for the purpose of acquiring a gantry mill machine. In connection with the $6.2 million tax exempt bond financing with the Massachusetts Development Finance Authority (the "MDFA") in 2010, the MDFA sold to the Bank MDFA Revenue Bonds, Ranor Issue, Series 2010A in the original aggregate principal amount of $4.25 million (the "Series A Bonds") and MDFA Revenue Bonds, Ranor Issue, Series 2010B in the original aggregate principal amount of $1.95 million (the "Series B Bonds"), the proceeds of which were loaned to the Company under the terms of a Mortgage Loan and Security Agreement, dated as of December 1, 2010, by and among the Company, MDFA and the Bank (as bond owner and Disbursing Agent).

In consideration for the granting of the Forbearance Agreement, the Company agreed to: (1) pay a forbearance fee of $30,000 (originally required by the Second Forebearance Agreement), which shall be paid on the earlier of (x) payment of the obligations under the Loan Agreement and the Third Forbearance Agreement or (y) the Forbearance Termination Date (as defined in the Third Forbearance Agreement); (2) pay the installment of principal and interest on the Series A Bonds and Series B Bonds on July 1, 2014 in the amount of $22,344.26; (3) pay an interest rate per annum on the Series A Bonds and Series B Bonds commencing on July 1, 2014 to 65% of the sum of one month Libor plus 5.75% and a further increase to 65% of the sum of one month Libor plus 15%; (4) pay the full amount of the outstanding indebtedness under the Loan Agreement at the end of the Forbearance Period; and (5) pay any and all costs and expenses of the Bank in connection with the Forbearance Agreement and any and all costs and expenses incurred in connection with the credit extended by the Bank or the preservation or enforcement of any rights of the Bank under the Forbearance Agreement or the Loan Agreement.

During the Forbearance Period, the Obligors agree to comply and all the terms, covenants and provisions in the Loan Agreement and related documents.

The description of the Forbearance Agreement contained in this Item 1.01 to the Current Report on Form 8-K is qualified in its entirety by reference to the full text of the Forbearance Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits 10.1 Forbearance and Modification Agreement, dated July 1, 2014, by and among TechPrecision Corporation, Ranor, Inc. and Santander Bank, N.A.



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Source: Edgar Glimpses


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