UniTek enters term, revolver amendments; termination notice withdrawn

By Caroline Salls

Pittsburgh, July 31 - UniTek Global Services, Inc. entered into a second amendment and limited waiver to its term credit agreement and an amendment and limited waiver to its revolving credit and security agreement, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

Cerberus Business Finance, LLC is the administrative agent on the term agreement. Apollo Investment Corp. is the revolver agent.

According to a company news release, the term amendment waives all existing defaults and resets financial and other covenants related to the company's previously announced financial restatements.

Specifically, UniTek said the term lenders waived existing defaults and revised the financial covenants and covenants related to the delivery of its audited financial statements for the year ended Dec. 31, 2012 and unaudited financial statements for the quarters ended March 31 and June 30.

The facility will keep its original maturity date of April 15, 2018.

The amended term loan will continue to bear interest payable in cash at either Base rate plus 850 basis points or Libor plus 950 bps with a 1.5% floor, plus, in either case, an amount to be added to the principal balance of the term loan at an annual rate equal to 4% of the outstanding balance.

In connection with the term amendment, the company said it issued warrants to the term lenders, exercisable at $0.01 per share, for shares of UniTek's common stock equal to 19.99% of the shares outstanding before the amendment date.

The company said it also entered into a customary registration rights agreement with the term lenders under which it has committed to register the resale of the shares underlying the warrants.

Revolver amendment

Under the revolver amendment, the parties agreed to eliminate an overadvance fee equal to a percentage of the additional borrowing base amount.

UniTek said the overadvance fee had been equal to 0.67% of the additional borrowing base amount for each of the first four months of the revolver, 0.80% of the additional borrowing base amount for the fifth month, and 1% of the additional borrowing base amount each month thereafter, and had become earned, due and payable on the first business day of each month, in arrears, and immediately payable upon termination of the revolving credit facility.

In connection with eliminating the overadvance fee, the company and the agent agreed in the revolver amendment to increase the applicable margin on the facility, resulting in interest rates of the Base rate plus 825 basis points and Libor plus 925 bps.

The revolver amendment also contains a waiver by the lenders of specified restrictions and modifies definitions related to the term amendment.

The revolver amendment also contains a waiver of any existing defaults and events of default under the revolving facility.

Termination withdrawal

In addition, UniTek said the conditions to a termination notice withdrawal agreement between wholly owned subsidiary DirectSat USA, LLC and DirecTV, LLC were satisfied as of July 25.

In May, DirectSat received a letter from DirecTV providing a 180-day notice of the termination of the parties' home services provider agreement, effective Nov. 8.

DirectSat subsequently entered into the termination notice withdrawal agreement, providing that the notice would be automatically withdrawn upon the satisfaction of specified conditions.

"Our work on the financial restatements is progressing toward completion, and with the recently closed refinancing of the ABL revolver, this comprehensive amendment to our term loan and the rescission of the DirecTV termination notice, our team is more energized and more committed than ever to meeting our near- and longer-term growth objectives," UniTek chief executive officer Rocky Romanella said in the release.

"We have made great progress recently, and look forward to the completion of additional milestone events in this process."

UniTek is a Blue Bell, Pa.-based provider of engineering, construction management and installation fulfillment services to the telecommunications, broadband cable and satellite industries.

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