Enerpac refinances debt with $550 million revolver and $300 million term loan
Key Facts
Enerpac Tool Group entered into a fully amended and restated credit agreement on October 16, comprising a $550 million revolving facility and a $300 million term loan. Borrowings under both facilities mature on October 16, 2031, according to a filing by the company with the U.S. Securities and Exchange Commission. The agreement was signed with the borrower’s subsidiaries, guarantors and lenders, with PNC Bank acting as administrative agent. It replaces previous financing that was scheduled to mature on September 9, 2027. The company said initial borrowings under the new agreement were used to repay outstanding debt under the previous agreement, as well as to pay fees and transaction expenses.
The previous agreement, dated September 9, 2022, included a $625 million revolving line and a $200 million term loan, following earlier amendments. Under the new agreement, the revolving line is smaller, while the term loan is larger than the previous loan. The new line permits borrowings of up to $200 million in acceptable foreign currencies, including euros, British pounds or other currencies agreed by the parties. The company may also request increases in the facilities or add term loan tranches totaling up to $425 million. This option is subject to customary conditions, including the commitment of participating lenders.
The term loan carries a quarterly repayment schedule beginning on March 1, 2028, with installments of $937,500. Installments rise to $1.875 million per quarter starting on March 1, 2029, then to $3.75 million starting on March 1, 2030. The remaining balance is due at maturity, on October 16, 2031. The initial interest rate on borrowings is the term SOFR rate plus 1.125% per year, with margins varying according to the company’s net leverage. SOFR loan margins range from 1.125% to 1.875%, while base rate loan margins range from 0.125% to 0.875% per year.
The agreement includes an annual fee on the unused portion of the revolving facility, ranging from 0.150% to 0.275% based on net leverage. The loans are also secured by most of the personal property of the company and domestic guarantors, subject to specified exceptions, as well as certain equity interests in subsidiaries. Financial covenants require the company to keep net leverage at or below 3.75 to 1 at the end of each fiscal quarter. The limit may rise to 4.25 to 1 during a material acquisition testing period and the following four periods, subject to specified conditions. The interest coverage ratio must also be at least 3.00 to 1.
The financing follows Enerpac’s July 7 announcement of an agreement to acquire SFE Group for approximately $472 million in cash. At the time, the company said SFE had generated approximately $170 million in sales and approximately $44 million in adjusted earnings before interest, taxes, depreciation and amortization over the trailing twelve months. Enerpac estimated that the deal would expand its total addressable market by approximately $1 billion. It said then that it expected to fund the acquisition with available cash and borrowings, and that net debt to adjusted earnings before interest, taxes, depreciation and amortization would be approximately 2.8 times at closing. It also expected the acquisition to be accretive to adjusted earnings per share in fiscal 2027.
Enerpac had said the SFE deal was expected to close in the first quarter of fiscal 2027, subject to regulatory approvals and customary closing conditions. The company’s next announced dates include an investor day at the New York Stock Exchange on November 4, 2026. In trading on October 23, EPAC shares closed at $35.79, compared with a close of $35.63 the previous day. The stock had closed at $35.23 on October 19, $35.56 on October 20 and $35.46 on October 21. These prices show the closes on the dates listed and do not specify the trading range during the October 23 session.