Item 1.01 Entry into a Material Definitive Agreement.
On November 16, 2007, Vulcan Materials Company (formerly named Virginia Holdco, Inc.
and referred to herein as “Vulcan”, “we” or “us”) entered into (i) a $2,000 million
revolving 364-Day Bridge Credit Agreement dated as of November 16, 2007 (the “Bridge
Credit Agreement”) with Wachovia Bank, National Association, as administrative agent
(in such capacity, the “Bridge Administrative Agent”), and the lenders (the “Bridge
Lenders”) and other parties thereto; (ii) a revolving $500 million 364-Day Credit
Agreement dated as of November 16, 2007 (the “364-Day Credit Agreement”) with Bank
of America, N.A., as administrative agent (in such capacity, the “364-Day
Administrative Agent”), and the lenders (the “364-Day Lenders”) and other parties
thereto; and (iii) a revolving $1,500 million Five-Year Credit Agreement dated as of
November 16, 2007 (the “Five-Year Credit Agreement”, and together with the Bridge
Credit Agreement and the 364-Day Credit Agreement, the “Credit Agreements”) with
Bank of America, N.A., as administrative agent (in such capacity, the “Five-Year
Administrative Agent”), and the lenders (the “Five-Year Lenders”, and together with
the Bridge Lenders and the 364-Day Lenders, the “Lenders”) and other parties
thereto. We refer to the credit facility under the Bridge Credit Agreement as the
“Bridge Credit Facility”, the credit facility under the 364-Day Credit Agreement as
the “364-Day Credit Facility”, the credit facility under the Five-Year Credit
Agreement as the “Five-Year Credit Facility”, and the three together as the “Credit
Facilities”.
The Credit Facilities are senior unsecured debt obligations of Vulcan. The Credit
Agreements contain customary representations, affirmative and negative covenants
(including limitations on liens, and a maximum consolidated debt to total
capitalization ratio of 0.65 to 1.00) and events of default usual for credit
facilities of the type. The Bridge Credit Agreement requires mandatory prepayments
in the event of public or private offerings of equity, hybrid or debt securities or
debt issuances, subject to certain exceptions and thresholds.
The Bridge Credit Facility matures on November 14, 2008. The 364-Day Credit
Facility matures on November 14, 2008, provided that Vulcan may, not more than 90
days but not less than 60 days prior to November 14, 2008, request that each 364-Day
Lender extend the original maturity date for one additional 364-day period. The
Five-Year Credit Facility matures on November 16, 2012, provided that Vulcan may,
not later than 60 days prior to the second anniversary of the closing date, request
that each Five-Year Lender extend the original maturity date for one additional
one-year period. Vulcan may (i) request an increase in the commitments under the
364-Day Credit Facility by up to $500 million and (ii) request an increase in the
commitments under the Five-Year Credit Facility by up to $500 million, subject in
each case to Vulcan obtaining commitments from new and existing lenders for the
additional amounts, provided that the amount of increases under the 364-Day Credit
Facility plus the amount of increases under the Five-Year Credit Facility shall not
exceed, in the aggregate, $500 million. The Five-Year Credit Facility also contains
a sublimit of $250 million for the issuance of letters of credit and a swing line
sublimit of $25 million. The 364-Day Credit Facility and the Five-Year Credit
Facility also contain a $200 million sublimit for competitive bid loans.
Proceeds of the Credit Facilities may only be used to finance the acquisition of
Florida Rock Industries, Inc. (“Florida Rock”), which was completed on November 16,
2007, and to pay related fees and expenses, to repay certain existing debt and to
back-up Vulcan’s commercial paper program as well as for ongoing working capital
requirements and general corporate purposes.
The loans under the Credit Facilities bear interest at a rate equal to LIBOR plus a
margin determined by reference to a ratings-based pricing grid, or the base rate
(which is defined as the higher of the Wachovia prime rate and the Federal funds
rate plus 0.50% for the Bridge Credit Facility and the higher of the Bank of America
prime rate and the Federal Funds rate plus 0.50% for the 364-Day Credit Facility and
the Five-Year Credit Facility). Assuming an A-/A3 equivalent credit rating level,
the applicable rate under the Bridge Credit Facility and the 364-Day Credit Facility
will be 0.200%, and the applicable rate under the Five-Year Credit Facility will be
0.190%. Each Credit Facility requires that we pay a facility fee (ranging from
0.045% to 0.085% for the Bridge Credit Facility and the 364-Day Credit Facility, and
ranging from 0.040% to 0.100% for the Five-Year Credit Facility, in each case based
on our ratings).
As of November 19, 2007, $1,500 million was outstanding under the Bridge Credit
Facility, $350 million was outstanding under the 364-Day Credit Agreement and $1,500
million was outstanding under the Five-Year Credit Agreement. The proceeds of the
initial borrowings were used to pay the purchase price for the acquisition of
Florida Rock and related fees and expenses. The Five-Year Credit Agreement replaced
our prior credit agreement. Vulcan expects to repay the outstanding loans and
reduce commitments under the Bridge Credit Facility with the proceeds of commercial
paper issuances under its new commercial paper program and with the proceeds of
primarily fixed rate debt at maturities ranging from 3 to 30 years.
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 us, including letters of credit, depository and account processing
services, for which we have paid and intend to pay customary fees, and our pension
fund also invests in funds managed by the
Lenders or affiliates of the Lenders. Goldman, Sachs & Co., an affiliate of Goldman Sachs Credit Partners L.P.,
a Lender, provided financial advisory services to Vulcan in connection with the
mergers for which it received customary fees. Certain of the initial Lenders were
parties to our prior credit agreement. Banc of America Securities LLC, an affiliate
of Bank of America, N.A., a Lender, and Goldman, Sachs & Co. are dealers with
respect to our new commercial paper program, and JPMorgan Chase Bank, N.A., an
affiliate of J.P. Morgan Securities Inc., is the issuing and paying agent. To hedge
our exposure on particular securities, we have from time to time entered into
transactions involving derivative instruments, such as swaps, with Bank of America,
N.A. Northern Trust Company, a Lender, serves as Trustee under the Vulcan Materials
Company Master Pension Trust. Donald B. Rice, one of our
directors, is a director of Wells Fargo & Company, an affiliate
of one of our Lenders, Wells Fargo Bank, National Association.
The foregoing description of the Credit Agreements is qualified in its entirety by
reference to the full text of the Credit Agreements, which are filed herewith as
Exhibit 10.1 (the Bridge Credit Agreement), Exhibit 10.2 (the 364-Day Credit
Agreement), and Exhibit 10.3 (the Five-Year Credit Agreement) to this Report and are
incorporated in this Report by reference.
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b. |
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Supplemental Indenture. |
On November 16, 2007, Vulcan announced that Vulcan, Legacy Vulcan Corp. (formerly
known as Vulcan Materials Company and referred to herein as “Legacy Vulcan”), and
The Bank of New York, as trustee (the “Trustee”), entered into a Supplemental
Indenture No. 1 (the “Supplemental Indenture”) to Legacy Vulcan’s Indenture, dated
as of May 1, 1991, between Legacy Vulcan and the Trustee under which Vulcan’s
existing 6% Notes due 2009 and existing medium-term notes (collectively, the
“Existing Notes”) were issued. Pursuant to the Supplemental Indenture, Vulcan fully
and unconditionally guarantees the obligations of Legacy Vulcan under the Indenture.
Also, on November 15, 2007, Legacy Vulcan filed with the Securities and Exchange
Commission Forms 15 with respect to the Existing Notes in order to cease Legacy
Vulcan’s independent reporting requirements under the Securities Exchange Act of
1934 with respect to Existing Notes.
A copy of the Supplemental Indenture is filed herewith as Exhibit 4.1.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
As described above under Item 1.01 of this Report, on November 16, 2007, we
entered into (i) a $2,000 million revolving 364-Day Bridge Credit Agreement, (ii) a
$1,500 million revolving Five-Year Credit Agreement and (iii) a $500 million
revolving 364-Day Credit Agreement.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
On November 19, 2007, as contemplated by the Agreement and Plan of Merger dated as
of February 19, 2007, as amended April 9, 2007, among us, Legacy Vulcan, Florida
Rock, Virginia Merger Sub, Inc. and Fresno Merger Sub, Inc., John D. Baker II was
elected a director of Vulcan, with a term expiring in 2009. Mr. Baker was formerly
the President, Chief Executive Officer and a director of Florida Rock. Mr. Baker
has been named to the Finance and Pension Funds Committee and the Safety, Health and
Environmental Affairs Committee of the Vulcan Board of Directors.
Item 8.01 Other Events.
On November 19, 2007, Vulcan issued a press release announcing the election of Mr.
Baker to the Board. The press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
On
November 21, 2007, Vulcan issued a press release announcing
final results of consideration elections by Florida Rock
shareholders. The press release is attached hereto as
Exhibit 99.2 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits:
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Description |
4.1
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Supplemental Indenture No. 1 dated as of November 16, 2007, among Vulcan
Materials Company, Legacy Vulcan Corp. and The Bank of New York, as trustee |
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10.1
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364-Day Bridge Credit Agreement dated as of November 16, 2007, among
Vulcan Materials Company, certain lenders party thereto and Wachovia Bank, National
Association, as administrative agent |
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10.2
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364-Day Credit Agreement dated as of November 16, 2007, among Vulcan
Materials Company, certain lenders party thereto and Bank of America, N.A., as
administrative agent |
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10.3
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Five-Year Credit Agreement dated as of November 16, 2007, among Vulcan Materials Company,
certain lenders party thereto and Bank of America, N.A., as administrative agent |
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99.1
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Press release dated November 19, 2007 issued by Vulcan Materials Company |
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99.2
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Press release dated
November 21, 2007 issued by Vulcan Materials Company |