Blog: MISTRAS GROUP, INC. : Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K) –

Item 1.01. Entry into a Material Definitive Agreement

On August 1, 2022, Mistras Group, Inc. (the “Company,” “we” or “us”) entered
into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank N.A.,
as administrative agent for the lenders and a lender, BofA Securities as
Syndication Agent and a lender, and the other lenders (collectively, the
“Lenders”). The Credit Agreement provides the Company with a $190 million 5-year
committed revolving credit facility (“Revolver”) and a $125 million term loan
(“Term Loan”). The Credit Agreement has a maturity date of July 30, 2027 and
permits the Company to borrow up to $100 million in non-US dollar currencies and
to use up to $20 million of the credit limit for the issuance of letters of
credit. Borrowings bear interest at SOFR plus a credit spread adjustment and
applicable SOFR margin ranging from 1.25% to 2.75%, based upon our Total
Consolidated Debt Leverage Ratio. Total Consolidated Debt Leverage Ratio means
the ratio of (a) Total Consolidated Debt (which means all our indebtedness,
including subordinated debt, on a consolidated basis) to (b) EBITDA for the
period of four consecutive fiscal quarters immediately preceding the date of
determination. EBITDA means (a) our consolidated net income, less (b) income (or
plus loss) from discontinued operations and extraordinary items, plus (c) income
tax expenses, plus (d) interest expense, plus (e) depreciation, depletion, and
amortization (including non-cash loss on retirement of assets), plus (f) stock
compensation expense, less (g) cash expense related to stock compensation, plus
or minus (h) certain other adjustments. We have the benefit of the lowest SOFR
margin if our Total Consolidated Debt Leverage Ratio is equal to or less than
1.25 to 1, and the margin increases as the ratio increases, to the maximum
margin if the ratio is greater than 3.75 to 1. The Credit Agreement is secured
by liens on substantially all the assets of the Company and certain of its U.S
subsidiaries and is guaranteed by those U.S. subsidiaries.

The Credit Agreement contains financial covenants requiring that we maintain a
Senior Secured Debt Leverage Ratio of no more than 4.0 to 1 at the end of each
quarter through June 30, 2023 and stepping down to a maximum permitted ratio of
no more than 3.75 to 1 for the remainder of the term. Senior Secured Leverage
Ratio means the ratio of (a) Senior Secured Debt (all indebtedness for borrowed
money and interest-bearing debt but excluding subordinated debt and certain
leases) to (b) EBITDA for the immediately preceding four quarters. This
financial covenant also includes a 0.50 to 1 step-up for four consecutive
quarters following a material acquisition (at least $25 million purchase price,
as defined in the Credit Agreement) and is only available once the Senior
Secured Leverage Ratio steps down to 3.75 to 1, as described above. The Credit
Agreement also contains a financial covenant requiring that we maintain a Fixed
Charge Coverage Ratio of 1.25 to 1. Fixed Charge Coverage Ratio means the ratio,
as of any date of determination, of (a) (i) EBITDA for the 12 month period
immediately preceding the date of determination, taken together as one
accounting period, less (ii) the aggregate amount of all capital expenditures
made during the period, less (iii) taxes paid in cash during the period, less
(iv) Restricted Payments (dividends, equity distributions and certain other
payments) paid in cash during the period, -to- (b) the sum of (i) all interest,
premium payments, debt discount, fees, charges and related expenses of us and
our subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case, to the extent treated as interest in accordance with U.S. generally
accepted accounting principles (“GAAP”) and to the extent paid in cash during
the period, (ii) the aggregate principal amount of all redemptions or similar
acquisitions for value of outstanding debt for borrowed money or regularly
scheduled principal payments made during the period, but excluding any such
payments to the extent refinanced through the incurrence of additional
Indebtedness otherwise expressly permitted under the Credit Agreement, and (iii)
payments made during the period under all leases that have been or should be, in
accordance with GAAP as in effect for our 2015 audited financial statement,
recorded as capitalized leases.

The Credit Agreement limits our ability to, among other things, create liens,
make investments, incur more indebtedness, merge or consolidate, make
dispositions of property, pay dividends, make distributions to stockholders or
repurchase our stock, enter into a new line of business, enter into transactions
with affiliates and enter into burdensome agreements. The Credit Agreement does
not limit our ability to acquire other businesses or companies except that the
acquired business or company must be in our line of business, we must be in
compliance with the financial covenants on a pro forma basis after taking into
account the acquisition, and we must provide written notice at least five
business days prior to the date of an acquisition of $10 million or more.


The foregoing is a summary of the Credit Agreement and not a complete
description of its terms and is qualified in its entirety by reference to the
full text of the Credit Agreement, which is filed as Exhibit 10.1 to this Report
and incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

On August 1, 2022, Mistras issued a press release announcing the Credit
Agreement, which is furnished as Exhibit 99.1 to this Report.

Item 9.01. Financial Statement and Exhibits

(d) Exhibits

  10.1     Credit Agreement, dated August 1, 2022.
  99.1     Press release issued by Mistras on     August 1, 2022    .


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