UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 7, 2006
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DARLING INTERNATIONAL INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-24620 36-2495346
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
251 O'CONNOR RIDGE BLVD., SUITE 300, IRVING, TEXAS 75038
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972) 717-0300
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Credit Agreement
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On April 7, 2006, Darling International Inc., a Delaware corporation
("Darling"), entered into a new $175 million Credit Agreement (the "Credit
Agreement"), dated April 7, 2006, among various lenders thereto (the "Lenders")
and JPMorgan Chase Bank, N.A., as administrative agent.
Pursuant to the terms of the Credit Agreement, Darling may borrow,
prepay and re-borrow up to $125 million under a revolving credit facility, which
will include a $35 million letter of credit sub-facility and a $10 million
swingline loan sub-facility. Under the Credit Agreement, Darling may borrow up
to $50 million under a delayed, multi-draw term loan facility. The obligations
under the Credit Agreement are guaranteed by Darling National LLC, a Delaware
limited liability company and a wholly-owned subsidiary of Darling ("Darling
National"), and are secured by substantially all of the property of Darling and
Darling National, including a pledge of all equity interests in Darling
National. The term loan facility will be amortized at $1.25 million per quarter
over a six-year term. The revolving credit facility has a five-year term. The
proceeds of the term loan facility under the Credit Agreement may be used for
(i) the payment of the amounts payable as consideration for the proposed
acquisition of substantially all of the assets of National By-Products, LLC, an
Iowa limited liability company ("NBP"), and (ii) the refinancing of certain
existing indebtedness (as described below in Item 1.02), including subordinated
indebtedness. The proceeds of the revolving credit facility may be used for (i)
the payment of the fees and expenses payable in connection with the Credit
Agreement, the proposed acquisition of substantially all of the assets of NBP
and the repayment of indebtedness, (ii) financing the working capital needs of
Darling and its subsidiaries and (iii) other general corporate purposes. The
Credit Agreement replaces the 2004 Credit Agreement described below under Item
1.02.
Alternate base rate loans under the Credit Agreement will bear
interest at a rate per annum based on the greater of (a) the prime rate and (b)
the Federal Funds Effective Rate plus 1/2 of 1% plus, in each case, a margin
determined by reference to a pricing grid and adjusted according to Darling's
adjusted leverage ratio. Eurodollar loans will bear interest at a rate per annum
based on the then applicable London Inter-Bank Offer Rate ("LIBOR") multiplied
by the statutory reserve rate plus a margin determined by reference to a pricing
grid and adjusted according to Darling's adjusted leverage ratio.
The Credit Agreement contains certain restrictive covenants that are
customary for similar credit arrangements. There are also financial covenants
that require Darling to maintain a fixed charge coverage ratio of less than 1.25
to 1.00 (EBITDA minus cash taxes to fixed charges for the period of four
consecutive fiscal quarters), and a leverage ratio not to exceed 3.00 to 1.00
(total indebtedness outstanding to adjusted EBITDA for the four fiscal quarter
period most recently ended). The Credit Agreement also requires Darling to make
certain mandatory prepayments of outstanding indebtedness using the net cash
proceeds received from certain dispositions of property, casualty or
condemnation, any sale or issuance of equity interests in a public offering or
in a private placement, unpermitted additional indebtedness incurred by Darling,
and excess cash flow under certain circumstances.
The Credit Agreement provides for customary events of default with
corresponding grace periods, including failure to pay any principal or interest
when due, inaccuracy of representations, warranties or certifications, failure
to make payment of any material indebtedness, failure to perform or observe
covenants, bankruptcy or insolvency events, unsatisfied or unstayed judgments
for the payment of money in excess of $5,000,000, an ERISA event that could
reasonably be expected to have a material adverse effect, failure of any lien on
collateral to be valid and perfected, and change of control. Upon the occurrence
and during the continuance of an event of default, the administrative agent upon
the request of the requisite number of Lenders is required to declare all
amounts owing under the Credit Agreement to be immediately due and payable,
terminate the Lenders' commitments to make loans under the Credit Agreement,
and/or exercise any and all remedies and other rights under the Credit
Agreement.
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Certain of the Lenders and their affiliates have provided, from time
to time, and may continue to provide, investment banking, commercial banking,
financial and other services to Darling, including letters of credit, depository
and account processing services, for which Darling has paid and intends to pay
customary fees. Also, certain of the Lenders were a party to the 2004 Credit
Agreement.
The summary of the Credit Agreement in this Current Report on Form
8-K is qualified in its entirety by reference to the full text of the Credit
Agreement attached hereto as Exhibit 10.1.
On April 10, 2006, Darling issued a press release, which is filed as
Exhibit 99.1 hereto and incorporated herein by reference, announcing the
execution of the Credit Agreement.
First Amendment to Note Purchase Agreement
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On April 7, 2006, Darling entered into a First Amendment to Note
Purchase Agreement (the "First Amendment"), dated April 7, 2006, among the
securities purchasers party thereto. The First Amendment amends the Note
Purchase Agreement, dated as of December 31, 2003, by and among Darling, the
guarantors party thereto from time to time and the securities purchasers party
thereto (the "Note Purchase Agreement"), a copy of which was previously filed as
Exhibit 10.1 to Darling's Current Report on Form 8-K filed January 8, 2004.
The First Amendment provides for certain changes to the covenants in
the Note Purchase Agreement to permit (i) entry into the Credit Agreement and
(ii) the acquisition of substantially all of the assets of NBP.
Based on its filings with the Securities and Exchange Commission, as
of April 3, 2006, SOF Investments, L.P., a Delaware limited partnership and a
party to the First Amendment, is the record and beneficial owner of 9,296,127
shares of Darling common stock.
The summary of the First Amendment in this Current Report on Form 8-K
is qualified in its entirety by reference to the full text of the First
Amendment attached hereto as Exhibit 10.2.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
In connection and simultaneously with the execution of the Credit
Agreement, on April 7, 2006, Darling terminated its Credit Agreement dated April
2, 2004, among Darling, the lenders signatory thereto from time to time, General
Electric Capital Corporation, as administrative agent, and Comerica Bank, as
revolving credit agent (the "2004 Credit Agreement"). The 2004 Credit Agreement
was for a term of 5 years and provided for a term loan facility of $25 million
and for a revolving credit facility of up to $50 million. The 2004 Credit
Agreement was secured by substantially all the property of Darling. The 2004
Credit Agreement contained various restrictive covenants that are customary for
similar credit agreements. The 2004 Credit Agreement also contained financial
covenant tests, including limitations on capital expenditures, minimum fixed
charge coverage and tangible net worth tests and maximum leverage ratio test.
Darling did not incur any termination penalties in connection with the
termination of the 2004 Credit Agreement.
Certain of the lenders party to the 2004 Credit Agreement and their
affiliates have provided, from time to time, and may continue to provide,
investment banking, commercial banking, financial and other services to Darling,
including letters of credit, depository and account processing services, for
which Darling has paid and intends to pay customary fees.
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ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information included in Item 1.01 of this report is incorporated
by reference into this Item 2.03.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
10.1 Credit Agreement, dated as of April 7, 2006, among Darling
International Inc., various lending institutions party
thereto and JPMorgan Chase Bank, N.A.
10.2 First Amendment to Note Purchase Agreement, dated as of
April 7, 2006, among Darling International Inc. and the
securities purchasers party thereto.
99.1 Press Release issued by Darling International Inc. on April
10, 2006.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DARLING INTERNATIONAL INC.
Date: April 13, 2006 By: /s/ John O. Muse
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John O. Muse
Executive Vice President
Finance and Administration
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EXHIBIT LIST
10.1 Credit Agreement, dated as of April 7, 2006, among Darling
International Inc., various lending institutions party thereto and
JPMorgan Chase Bank, N.A.
10.2 First Amendment to Note Purchase Agreement, dated as of April 7, 2006,
among Darling International Inc. and the securities purchasers party
thereto.
99.1 Press Release issued by Darling International Inc. on April 10, 2006.
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