Item 1.01 Entry into a Material Definitive Agreement
On August 6, 2014, our Brazilian subsidiary Tecumseh do Brazil LTDA received the
first installment in the amount of 27.0 million Reals for a special term
governmental loan from Financiadora de Estudios e Projectos ("FINEP"). Tecumseh
do Brazil and FINEP entered into a Finance Contract regarding this loan on July
7, 2014. FINEP is a federal institution linked to the Ministry of Science,
Technology and Innovation of Brazil. FINEP provides funding to companies to
further innovation and research and development spending in Brazil.
Based on the Finance Contract, Tecumseh do Brazil was approved for a loan in the
amount of up to 82,475,114.40 Reals to be used on approved research and
development projects covering the development of new products and processes,
provided that Tecumseh do Brazil will spend up to 35,346,477.60 Reals of its own
resources on the projects. The financing will be received in three installments
over a period of three years, provided that Tecumseh do Brazil submits all
required documentation for the approval of each installment. Tecumseh do Brazil
will have a grace period of 36 months for the repayment of the loan principal,
after which the loan will be repaid on a monthly basis between 07/15/2017 and
07/15/2023. Tecumseh do Brazil will be charged a compound interest based on the
Brazilian federal long-term interest rate TJLP plus 0.5% per annum, which
currently amounts to 5.5%. The interest rate is reduced by a reduction factor
defined in the Finance Contract, should the TJLP rise above 6%. Tecumseh do
Brazil must pay various fees in connection with the Finance Contract, including
(i) 1.12% of the amount funded as an annual fee for inspection and supervision
by FINEP, and (ii) 0.1% as a credit reserve charged for available but unfunded
The foregoing summary of the Finance Contract and the transactions described in
the Finance Contract does not purport to be complete and is subject to and
qualified in its entirety by reference to the terms and conditions of the
Finance Contract, a copy of which is attached to this report as Exhibit 10.1 and
incorporated in this report by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
The description of the Finance Contract in Item 1.01 of this report is
incorporated by reference in this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
The following exhibit is filed with this report:
Exhibit No. Description
10.1 Finance Contract between Financiadora de Estudios e Projectos
(FINEP) and Tecumseh do Brazil LTDA dated July 7, 2014 (English