Item 1.01 Entry into a Material Definitive
Agreement.
DYNAenergetics Purchase Agreement
On November 15,
2007, Dynamic Materials Corporation, a Delaware corporation (the Company)
entered into a Purchase, Sale and Assignment Agreement (the Purchase Agreement)
with DYNAenergetics Holding GmbH, a German limited liability company and
wholly-owned subsidiary of the Company (the Purchaser), Rolf Rospek, Patrick
Xylander, Uwe Gessel, OaG Beteiligungs-GmbH, a German limited liability company
(collectively the Sellers) and Volker Mertens. As further described in
Item 2.01, pursuant to the Purchase Agreement, the Company puchased
DYNAenergetics, a German-based manufacturer of
explosion-welded clad metal plates and
oil-field explosives and related hardware. The Purchase Agreement
contains customary representations, warranties and covenants, including, among
other things, customary indemnification and non-competition obligations from
the Sellers.
This summary of the terms of the Purchase Agreement is qualified in its
entirety by reference to the agreement which is filed as Exhibit 10.1 to this
report.
Credit Agreement
On November
16, 2007, the Company and its wholly owned subsidiary, Dynamic Materials
Luxembourg 2 S.à r.l. (LuxCo), entered into dollar and euro term and
revolving credit facilities with a syndicate of banks led by JPMorgan Chase
Bank, N.A. (the Credit Agreement). The outstanding principal amounts of the
term loans are $45,000,000 and 14,000,000. The maximum revolving loan
commitments are $25,000,000 and 7,000,000, 50% of which are currently
available and no amounts of which are outstanding as of November 19, 2007. The
Company expects the full amount of the revolving loan commitments to become
available within 30 days following completion of the German registration
formalities regarding the DYNAenergetics acquisition.
The proceeds
of the loans were used to fund a portion of the cash purchase price under the
Purchase Agreement and to pay transaction costs. The initial interest rate on
the dollar and euro loans was 6.34% and 5.889%, respectively.
The Credit
Agreement contains various representations, warranties and affirmative,
negative and financial covenants customary for credit facilities of this type. The
negative covenants limit dividends and other restricted payments, liens,
acquisitions, disposals, indebtedness, investments, and capital expenditures. The
financial covenants include a maximum leverage ratio and a minimum fixed charge
coverage ratio. The Credit Agreement also includes events of default customary
for credit facilities of this type.
The credit facilities
are supported by a pledge of substantially all the assets of the Company and
guarantees and share pledges by certain of its subsidiaries.
In connection
with the Credit Agreement, on November 16, 2007, the Company and LuxCo entered
into a letter agreement with JPMorgan Chase Bank, N.A. (the Letter Agreement),
pursuant to which the Company and LuxCo agreed to satisfy certain post-closing
conditions. The Company has 60 to 120 days to satisfy the remaining conditions,
and it expects
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