Item 1.01. Entry Into a Material Definitive Agreement.
Accommodation Agreement
On May 22, 2023, Unique Fabricating, Inc. and its subsidiaries (the "Supplier"
or the "Company") entered into an Accommodation Agreement with General Motors
LLC, FCA US LLC, FCA Mexica, S.A. de CV and FCA Canada Inc. and Yanfeng
Automotive Interior Systems Co., three of its principal customers (the
"Customers") and Citizens Bank, National Association, in its capacity as the
Agent for the financial institutions (the "Lenders" and together with the Agent,
(the "Lending Group")) party to the Amended and Restated Credit Agreement dated
November 18, 2018, as amended, including by the Forbearance Agreement described
herein (the "Credit Agreement"). Pursuant to and subject to the terms of the
Accommodation Agreement, the Customers agreed to provide certain financial and
other accommodations to the Supplier and the Lending Group to support on-going
operations of and a sale or restructuring process by Supplier.
The Accommodation Agreement will continue until the date that is the earliest of
certain events including: (a) the closing of a sale of the Company to a
qualified buyer, but only with respect to the Supplier location(s) that are
covered by any such transaction; (b) solely as to a Customer exercising its
right to terminate the term of the agreement due to the occurrence of an event
of default; or (c) October 31, 2023.
The Accommodation Agreement provides for specified price increases to be paid by
Customers during the term or other funding to be provided by Customers to the
Company through the purchase by Customers of a junior tranche of debt to be
established under the Credit Agreement of up to $15 million in the aggregate.
Customers also agreed not to exercise certain rights of set off, recoupment,
deduction or defense and not to resource production of component parts to other
suppliers during the term. The agreement further requires that, within five
business days of its execution, Supplier obtain commitments (i) from its seven
largest customers (other than Customers) to provide to Supplier economic
benefits equal to or greater to those arising under the Accommodation Agreement
and (ii) from the remainder of Supplier's customers to provide Supplier with
economic benefits to support its business during the term of the Accommodation
Agreement.
The Accommodation Agreement requires Supplier to conduct its operations and
business in accordance with an agreed upon budget. The agreement also requires
that Supplier commence a process for the sale of its business to a qualified
buyer, in accordance with fixed milestones which contemplates completion of the
sale process by no later than October 31, 2023. The agreement also requires that
the Supplier deliver to each Customer and Agent a restructuring plan within 30
days, appoint a chief restructuring consultant and engage an investment banker.
The Accommodation Agreement contains further provisions to the benefit of the
Customers in the event the agreement terminates without a sale or restructuring.
This summary of the Accommodation Agreement does not purport to be complete and
is subject to, and qualified in its entirety by, the full text of the
Accommodation Agreement to be filed by amendment as Exhibit 10.1 to this Current
Report on Form 8-K and incorporated herein by reference.
Forbearance Agreement
On May 22, 2023, Unique Fabricating NA, Inc. and Unique-Intasco Canada, Inc. and
their parent, Unique Fabricating, Inc. (the "Company") and their subsidiaries
entered into a Forbearance Agreement with respect to the Credit Agreement. The
Company has defaulted under the terms and conditions of the Credit Agreement (1)
by not paying the outstanding amount of the Loans on the Repayment Date,
February 17, 2023, (2) by not paying the quarterly payment due on March 31,
2023, (3) by not timely providing financial statements in violation of the
Credit Agreement and (4) by providing inaccurate financial statements for
November 2022 (the "Third Specified Events of Default").
The Lending Group agreed to forbear from exercising their rights to collect
payment of the indebtedness until October 31, 2023, subject to earlier
termination in certain events or the termination of the Accommodation Agreement,
as described above. The Forbearance Agreement is conditioned on, among other
things, the Customers entering into the Accommodation Agreement and payment to
the Lenders by the Company of the principal reduction payment that was due March
31, 2023 in the amount of $1,228,125, interest that has been invoiced and is
overdue, and attorney and advisor fees of the Lenders, all of which have been
paid. The Forbearance Agreement creates a Junior Tranche of the revolving line
of credit under the Credit Agreement in the amount of up to $15,010,000 to be
funded by the sale of junior participation interests in the revolving line of
credit to certain customers that are parties to the Accommodation Agreement.
The Forbearance Agreement provides that during the Forbearance Period, the Agent
and Lenders will accept fifty percent of the quarterly amortizing loan payments
due on June 30, 2023 and September 30, 2023, to be paid in monthly installments.
The balance of the payments are deferred until the earlier of a Forbearance
Termination Event, as defined, the Maturity Date or repayment of the loans. The
agreement also increases the advance rates for Accounts Receivable, Eligible
Inventory (raw materials) and Eligible Inventory (finished Goods).
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The agreement requires that the Company engage a Chief Restructuring Consultant
and appoint an Investment Banker. The Company is required to commence a going
concern assets sale in one or more transactions to qualified buyers, as defined,
in accordance with a specified schedule with the closing to occur no later than
October 31, 2023.
This summary of the Forbearance Agreement does not purport to be complete and is
subject to, and qualified in its entirety by, the full text of the Forbearance
Agreement to be filed by amendment as Exhibit 10.2 to this Current Report on
Form 8-K and incorporated herein by reference.
Item 9.01. Exhibits.
(d) Exhibits. The following exhibits are filed herewith:
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