| Item 1.01. |
Entry into a Material Definitive Agreement. |
As previously disclosed, Construction Partners, Inc. (the “Company”), certain of its wholly owned subsidiaries in their capacity as co-borrowers (collectively with the Company, the “Existing Borrowers”), and certain of the Company’s wholly owned subsidiaries in their capacity as guarantors (collectively with the Existing Borrowers, the “Existing Loan Parties”) are party to that certain Third Amended and Restated Credit Agreement with PNC Bank, National Association, as administrative agent and lender, PNC Capital Markets LLC, as joint lead arranger and sole bookrunner, Regions Bank and BofA Securities, Inc., each as a joint lead arranger, and certain other lenders party thereto (as amended from time to time, the “Existing Term Loan A / Revolver Credit Agreement”).
On June 30, 2025 (the “Effective Date”), the Existing Loan Parties entered into the Fifth Amendment to the Existing Term Loan A / Revolver Credit Agreement (the “Amendment,” and the Existing Term Loan A / Revolver Credit Agreement, as amended by the Amendment, the “Amended Term Loan A / Revolver Credit Agreement”) to, among other things, (i) increase the existing revolving credit facility under the Existing Term Loan A / Revolver Credit Agreement from $400.0 million to $500.0 million (the “Increased Revolving Credit Facility”), (ii) increase the existing term loan facility under the Existing Term Loan A / Revolver Credit Agreement from $400.0 million to $600.0 million (the “Increased Term Loan A”), (iii) permit the Borrowers (as defined below) to request one or more incremental term loans or an increase in the commitments under the Increased Revolving Credit Facility (in either case, an “Incremental Facility”) in an aggregate principal amount of up to the greater of (a) $400.0 million and (b) the amount of Consolidated Adjusted EBITDA (as defined in the Amended Term Loan A / Revolver Credit Agreement) of the Company for the immediately preceding four-fiscal-quarter period, on the same terms as the Increased Term Loan A or the Increased Revolving Credit Facility, as applicable, including pricing, and, in the case of an Incremental Facility that is a term loan, the then-applicable amortization rate, and (iv) extend the maturity date for all outstanding borrowings under the Amended Term Loan A / Revolver Credit Agreement to June 28, 2030. The availability of one or more Incremental Facilities is subject to the satisfaction of certain conditions as set forth in the Amended Term Loan A / Revolver Credit Agreement.
The Amendment also (i) modifies certain negative covenants, (ii) removes the financial covenant requiring the Company’s consolidated fixed charge coverage ratio to exceed certain minimum levels and replaces it with a financial covenant requiring the Company’s consolidated interest coverage ratio to equal or exceed 3.00 to 1.00, and (iii) adjusts the maximum consolidated net leverage ratio permitted under the Amended Term Loan A / Revolver Credit Agreement as follows: (a) for each fiscal quarter ending on or prior to December 31, 2025, a maximum consolidated net leverage ratio of 4.50 to 1.00; (b) for each fiscal quarter ending March 31, 2026 through and including September 30, 2026, a maximum consolidated net leverage ratio of 4.25 to 1.00; (c) for each fiscal quarter ending December 31, 2026 through and including June 30, 2027, a maximum consolidated net leverage ratio of 4.00 to 1.00; and (d) for each fiscal quarter ending September 30, 2027 and thereafter, a maximum consolidated net leverage ratio of 3.75 to 1.00. Additionally, the Amendment removes the 0.10% adjustment to SOFR-based interest rates such that the annual interest rates under the Amended Term Loan A / Revolver Credit Agreement will be calculated, at the Company’s option, by using either a base rate, Term SOFR or (solely with respect to the Increased Revolving Credit Facility) Daily Simple SOFR, in each case, plus an applicable margin percentage that corresponds to the Company’s consolidated net leverage ratio.
In addition, in connection with the Amendment, each of TD Bank, N.A. and City National Bank became a joint lead arranger and certain additional subsidiaries of the Company were joined as borrowers (collectively with the Existing Borrowers, the “Borrowers,” and the Borrowers, collectively with the Existing Loan Parties, the “Loan Parties”).
A portion of the proceeds from the Increased Term Loan A were used to pay off the outstanding principal balance under the Increased Revolving Credit Facility. Accordingly, as of the Effective Date, after giving effect to the Amendment, no amounts were outstanding under the Increased Revolving Credit Facility, and $600.0 million of principal was outstanding under the Increased Term Loan A. Except as modified by the Amendment, the terms of the Existing Term Loan A / Revolver Credit Agreement remain the same.
