Tetra Tech extends credit facilities, changes pricing, covenants

By Angela McDaniels

Tacoma, Wash., June 2 – Tetra Tech, Inc. amended its credit agreement on Friday to extend the maturity date to May 29, 2020 from May 7, 2018 and change pricing, according to an 8-K filing with the Securities and Exchange Commission.

Following the amendment, the interest rate is Libor plus a margin that ranges from 115 basis points to 200 bps, and the commitment fee ranges from 20 bps to 35 bps. Both depend on the consolidated leverage ratio.

The amortization terms of the term loan were changed to reflect the change of maturity date. The company will repay the term loan in quarterly principal installments of $2,562,500 for the quarters ending in June, September, December 2015 and March 2016 and $3,843,750 thereafter.

The amendment also made the following changes:

• Provides the ability to increase the permitted incremental amount of the revolving credit commitments to $240 million from $150 million;

• Increases the maximum permitted consolidated leverage ratio to 3.0 to 1.0 from 2.5 to 1.0 while an elevated ratio period is not in effect as a result of acquisitions and to 3.25 to 1.00 from 3.0 to 1.0 while an elevated ratio period is in effect;

• Modifies the definition of consolidated EBITDA to permit the company to add back up to $96 million of non-cash charges associated with the wind-down of its remediation and construction management segment through the end of fiscal year 2017;

• Increases the capital lease basket to $25 million from $20 million;

• Allows unlimited permitted share repurchases if the consolidated leverage ratio is below 2.0 to 1.0 and permitted share repurchases of up to the greater of $125 million or 10% of consolidated net worth if the consolidated leverage ratio is equal to or greater than 2.0 to 1.0, with a modification of the definition of consolidated net worth used to calculate the basket for permitted share repurchases to exclude accumulated other comprehensive income (or loss) reflected on the company’s consolidated balance sheets as a result of unrealized mark to market fluctuations from swaps and other hedging transactions; and

• Increases the amount of permitted cash dividends and distributions to $50 million in any fiscal year from $40 million.

Bank of America, NA is the administrative agent.

Based in Pasadena, Calif., Tetra Tech provides environmental engineering and consulting services.

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