Geospace Technologies has replaced its bank credit agreement with a new three-year revolving loan from Amerisource Funding. The new facility has a maximum size of $25 million, but the amount Geospace can actually borrow is subject to a borrowing base.
Geospace used the new facility to repay the $7.5 million outstanding under its prior agreement with Woodforest National Bank, which was due to mature in August 2028. The Woodforest facility has been terminated, with no material early-termination penalties.
Key details
- Facility size and term: The Amerisource facility provides up to $25 million in revolving credit for Geospace Technologies and its subsidiary GTC, Inc. It has a three-year term.
- Borrowing limits: The $25 million is a maximum, not a guaranteed amount of available credit. Actual availability is determined by a borrowing base, which the lender can calculate and update. The agreement says the facility may be reviewed as needed in light of the company’s growth and working-capital needs.
- Interest and fees: Outstanding borrowings accrue interest at the prime rate plus 3.5%, with interest payments due monthly. The agreement also includes a 1% annual commitment fee, a 0.25% non-usage fee and early-termination fees of up to 3% of the total facility.
- Collateral and guarantees: The loan is secured by substantially all assets of the two borrowers, subject to certain exclusions. Some Geospace subsidiaries also guarantee the facility.
- Financial covenant: Geospace must maintain at least $65 million in tangible net worth.
- Default terms: Defaults include missed payments, covenant breaches, certain defaults on other obligations owed to Amerisource, bankruptcy, a change in control and a material adverse change. In a default, the lender may accelerate repayment; overdue obligations may accrue interest at 18%.
What changes for investors
The lender changes, but the new facility’s stated maximum matches the $25 million limit under the Woodforest agreement. The key qualification is that Amerisource’s borrowing-base calculation determines how much of that limit Geospace can draw. The new agreement also puts substantially all borrower assets behind the loan and includes a minimum-net-worth covenant and specified default protections for the lender.