CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED
CALDERWOOD & HARKNESS LLP Attorneys at Law
425 Lexington Avenue New York, New York 10017 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
March 28, 2025
The Board of Directors Nexford Industrial Holdings Inc. 1400 Industrial Parkway Schaumburg, Illinois 60173
Attention: James Thornton, Chief Executive Officer Michelle Kaplan, Chief Financial Officer David Engstrom, General Counsel & Corporate Secretary
Re: Closing Confirmation — $1,400,000,000 Senior Secured Term Loan B Facility — Nexford Industrial Holdings Inc. Calderwood & Harkness Matter No. 1005-00001
Dear Members of the Board:
1. Introduction and Closing Confirmation
Calderwood & Harkness LLP, as borrower's counsel to Nexford Industrial Holdings Inc. ("Nexford" or the "Borrower"), is pleased to confirm that the closing of the $1,400,000,000 senior secured Term Loan B facility (the "Term Loan B" or the "Facility") occurred on March 28, 2025 (the "Closing Date"). The Facility was established pursuant to the Credit Agreement dated as of the Closing Date (as defined below, the "Credit Agreement"), among the Borrower, the Guarantors party thereto, Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent, Ironwood Capital Markets, LLC and Northvane Securities, Inc., as Joint Lead Arrangers, and the Lenders party thereto from time to time.
All conditions precedent to the initial borrowing under the Credit Agreement, including those set forth in Section 4.01 and Section 4.02 thereof, were satisfied or, to the extent permitted, waived as of the Closing Date. No Default or Event of Default existed as of the Closing Date or resulted from the transactions consummated on the Closing Date. The loan proceeds in the aggregate amount of $1,400,000,000 were funded and disbursed on the Closing Date in accordance with the funds flow memorandum dated March 27, 2025, as agreed among the Borrower, the Administrative Agent, and the parties thereto.
The purpose of this letter is to summarize the principal terms of the transaction and the key documents executed at closing for the Board's records. This letter is intended as a summary only and does not purport to be a complete description of the rights, obligations, and terms contained in the Credit Agreement and the other Loan Documents. In the event of any inconsistency between this summary and the terms of the Credit Agreement or any other Loan Document, the terms of the applicable Loan Document shall govern. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.
2. Transaction Overview
The transaction consummated on the Closing Date consists of a senior secured Term Loan B financing in the aggregate principal amount of $1,400,000,000, the proceeds of which were used to refinance Nexford's existing credit facilities and to fund a dividend recapitalization distribution to the Borrower's indirect equity sponsors. The principal parties to the transaction are summarized below:
Borrower: Nexford Industrial Holdings Inc., a corporation organized and existing under the laws of the State of Delaware.
Sponsor: Granite Peak Capital Partners, LP, acting through Granite Peak Capital Fund IV, LP and GP Fund IV Co-Invest, LP. The Sponsor holds its equity interest in the Borrower indirectly through the holding company Granite Peak NIH Holdings, LLC, a Delaware limited liability company ("Holdings").
Administrative Agent and Collateral Agent: Crescent Harbor Bank, N.A., a national banking association with offices at 320 Federal Street, Boston, Massachusetts 02110.
Lead Left Arranger and Bookrunner: Crescent Harbor Bank, N.A.
Joint Lead Arrangers: Ironwood Capital Markets, LLC and Northvane Securities, Inc.
Syndicate Lenders: The Term Loan B was syndicated among a broad group of institutional lenders, including Ridgeline Asset Management, LP; Halcyon Credit Partners, LLC; Verdant Institutional Investors, LP; Cascadia Loan Fund III, LP; Bluewater Fixed Income Fund, LP; and additional institutional investors and CLO vehicles that participated in the general syndication.
Governing Law: The Credit Agreement and the other Loan Documents (other than certain security documents governed by the laws of other jurisdictions as specified therein) are governed by, and construed in accordance with, the laws of the State of New York.
3. Use of Proceeds
The sources and uses of funds in connection with the closing of the Facility are as follows:
Sources.
Uses.
The Board should note that the existing $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (CUSIP: 65432X AB9) (the "Senior Unsecured Notes"), issued under an indenture dated as of June 14, 2019, with Pinnacle Trust Company, as trustee, remain outstanding and are not refinanced or otherwise affected in this transaction. The Senior Unsecured Notes continue to be governed by their existing indenture and related documentation.
4. Principal Terms of the Credit Agreement
The following is a summary of the principal terms of the Credit Agreement. The Board is encouraged to review the Credit Agreement in its entirety for a complete understanding of the rights, obligations, covenants, and other terms governing the Facility.
4.1 Facility Amount and Type
The Facility consists of a $1,400,000,000 senior secured Term Loan B (institutional term loan). The Term Loan B has been assigned anticipated CUSIP number 65432X AA1 and anticipated LoanX ID LX-234567 for trading and settlement purposes.
4.2 Maturity. The Term Loan B matures seven (7) years from the Closing Date, on March 28, 2032 (the "Maturity Date"). All outstanding principal, accrued and unpaid interest, and all other amounts owing under the Credit Agreement are due and payable on the Maturity Date unless earlier prepaid or accelerated in accordance with the terms of the Credit Agreement.
4.3 Amortization. The Term Loan B amortizes at a rate of 1.00% per annum of the original aggregate principal amount, payable in equal quarterly installments. Each quarterly amortization payment equals $3,500,000, calculated as $1,400,000,000 multiplied by 1.00%, divided by four (4). The first quarterly amortization payment is due on June 30, 2025, and subsequent quarterly payments are due on the last business day of each fiscal quarter thereafter. The remaining outstanding principal balance of the Term Loan B is due and payable in full on the Maturity Date.
4.4 Interest Rate
The Term Loan B bears interest at a per annum rate equal to Term SOFR (as published by the CME Group Benchmark Administration Limited, or a successor administrator) plus an applicable margin of 400 basis points (4.00%). The Credit Agreement includes a SOFR floor of 0.75%, meaning that if published Term SOFR falls below 0.75%, Term SOFR shall be deemed to be 0.75% for purposes of calculating the applicable interest rate.
In addition, the following credit spread adjustments apply: 10 basis points (0.10%) for interest periods based on 1-month Term SOFR, and 15 basis points (0.15%) for interest periods based on 3-month Term SOFR. The Borrower has the right to elect interest periods of one month, three months, or six months, subject to customary provisions.
Upon the occurrence and during the continuance of any Event of Default, all outstanding obligations under the Credit Agreement shall bear interest at the default rate, which equals the otherwise applicable interest rate plus an additional 200 basis points (2.00%) per annum.
4.5 OID / Upfront Fee
The Term Loan B was issued at an original issue discount ("OID") of 50 basis points, reflecting an issue price of 99.50% of par. The aggregate OID equals $7,000,000. In addition, the following fees were payable in connection with the closing:
• Arrangement fee to Crescent Harbor Bank, N.A.: 50 basis points on the full Facility amount, equal to $7,000,000, payable at closing.
• Upfront fee to participating lenders in syndication: 100 basis points (1.00%) on each lender's allocated commitment, payable at closing out of loan proceeds.
4.6 Financial Covenant
The Credit Agreement contains a springing financial covenant requiring the Borrower to maintain a maximum first lien net leverage ratio of 5.00 to 1.00 (5.00x). This financial covenant is tested on a quarterly basis only when the aggregate outstanding revolving loans under any revolving credit facility (if established under the Credit Agreement or any incremental facility) exceed 40% of the aggregate revolving commitments at the time of testing.
No revolving credit facility was established as part of this transaction. Accordingly, the springing financial covenant is not currently operative. However, the covenant will become applicable if a revolving credit facility is subsequently added pursuant to the incremental facility provisions of the Credit Agreement and the conditions for testing are met.
4.7 Pro Forma Leverage at Closing
Based on the financial information provided by the Borrower and used in connection with the closing, the pro forma leverage ratios as of the Closing Date, after giving effect to the transactions, are as follows:
• Pro forma first lien net leverage: approximately 3.38x, calculated as ($1,400,000,000 in first lien debt minus $100,000,000 in balance sheet cash, subject to applicable netting provisions) divided by $385,000,000 in LTM Adjusted EBITDA.
• Pro forma total net leverage (including $250,000,000 Senior Unsecured Notes): approximately 4.03x, calculated as ($1,400,000,000 in first lien debt plus $250,000,000 in unsecured notes minus $100,000,000 in balance sheet cash) divided by $385,000,000 in LTM Adjusted EBITDA.
Both ratios are comfortably below the applicable covenant thresholds and incurrence-based ratio tests set forth in the Credit Agreement.
4.8 Mandatory Prepayments
The Credit Agreement requires the following mandatory prepayments of the Term Loan B:
(a) Excess Cash Flow. Commencing with the fiscal year ending December 31, 2025, the Borrower is required to prepay an amount equal to 50% of Excess Cash Flow (as defined in the Credit Agreement) for each fiscal year, subject to step-downs as follows: (i) to 25% of Excess Cash Flow if the first lien net leverage ratio is less than or equal to 4.25 to 1.00 as of the last day of such fiscal year, and (ii) to 0% of Excess Cash Flow if the first lien net leverage ratio is less than or equal to 3.50 to 1.00 as of the last day of such fiscal year. Excess Cash Flow prepayments are due within ten (10) business days after the date of delivery of the annual financial statements for the applicable fiscal year.
(b) Asset Sales. The Borrower is required to prepay an amount equal to 100% of the net cash proceeds received from any asset sale or other disposition of property (other than dispositions in the ordinary course of business and other customary exceptions), subject to (i) reinvestment rights permitting the Borrower to reinvest such net cash proceeds within 365 days following receipt (or, if the Borrower has entered into a binding commitment to reinvest within such 365-day period, within 545 days following receipt) in assets useful in the Borrower's business, and (ii) a $25,000,000 annual de minimis basket below which no prepayment is required.
(c) Non-Permitted Debt Issuances. The Borrower is required to prepay an amount equal to 100% of the net cash proceeds received from the issuance of any indebtedness not otherwise permitted under the Credit Agreement.
(d) Insurance and Condemnation Events. The Borrower is required to prepay an amount equal to 100% of the net cash proceeds received from any insurance recovery or condemnation event, subject to customary reinvestment rights and a $10,000,000 threshold below which no prepayment is required.
4.9 Voluntary Prepayment
The Term Loan B may be prepaid at par, in whole or in part, at any time, without premium or penalty, upon customary prior notice to the Administrative Agent (three (3) business days for SOFR loans and one (1) business day for ABR loans), subject to customary breakage costs. Notwithstanding the foregoing, a 101 soft call premium (1.00% of the principal amount prepaid) applies to any repricing transaction (as defined in the Credit Agreement) consummated within six (6) months of the Closing Date (i.e., prior to September 28, 2025).
4.10 Most Favored Nation Protection
The Credit Agreement includes most favored nation ("MFN") protection applicable to any incremental term loans incurred within twelve (12) months of the Closing Date. Under this provision, if any incremental term loan is priced at an effective yield exceeding the effective yield on the initial Term Loan B by more than 50 basis points (the "MFN Threshold"), the spread on the initial Term Loan B will be automatically increased to the extent necessary to reduce the differential to no more than 50 basis points.
4.11 Incremental Facility Provisions
The Credit Agreement permits the Borrower to incur incremental term loans and/or establish incremental revolving commitments, subject to the following terms:
• Free-and-clear basket: The Borrower may incur incremental indebtedness in an aggregate principal amount not to exceed the greater of (x) $280,000,000 and (y) 100% of LTM Adjusted EBITDA (currently approximately $385,000,000), in each case without satisfaction of any financial ratio test.
• Unlimited additional amounts: The Borrower may incur additional incremental indebtedness in unlimited amounts, subject to pro forma compliance (after giving effect to the incurrence and the use of proceeds thereof) with a first lien net leverage ratio of 4.50 to 1.00, calculated on the date of incurrence.
Incremental facilities are subject to customary conditions, including the absence of any Default or Event of Default (in certain circumstances), the execution and delivery of appropriate documentation, and the satisfaction of the MFN protections described in Section 4.10 above (to the extent applicable).
4.12 Restricted Payments
The Credit Agreement permits restricted payments (including dividends, distributions, and share repurchases) subject to the following principal baskets:
• General builder basket: A cumulative basket commencing with a starter amount of $50,000,000, increased by 50% of cumulative consolidated net income (if positive) earned from and after the first day of Q1 2025 (January 1, 2025), subject to no Default or Event of Default.
• Annual general basket: $25,000,000 per fiscal year, not subject to any leverage test.
• Unlimited restricted payments: The Borrower may make unlimited restricted payments, subject to pro forma compliance (after giving effect to such payment) with a total net leverage ratio of 3.75 to 1.00.
Additional baskets and exceptions (including for tax distributions, management equity repurchases, and customary exceptions) are set forth in the Credit Agreement.
4.13 Change of Control
The Credit Agreement includes a change of control put/prepayment event that is triggered upon the occurrence of any of the following:
(i) the acquisition by any person or group (other than Granite Peak Capital Partners, LP and its affiliates and related funds) of more than 35% of the total voting equity interests of Holdings (Granite Peak NIH Holdings, LLC);
(ii) Nexford Industrial Holdings Inc. ceasing to be a direct, wholly-owned subsidiary of Holdings (other than directors' qualifying shares and other de minimis amounts); or
(iii) the occurrence of a "change of control" (or similar event, however denominated) under the indenture governing the Senior Unsecured Notes.
Upon the occurrence of a change of control, the Administrative Agent, at the direction of the Required Lenders (as defined in the Credit Agreement), may declare all outstanding obligations under the Credit Agreement to be immediately due and payable without further notice or demand.
4.14 Negative Covenants
The Credit Agreement contains negative covenants customary for Term Loan B transactions of this type, including, without limitation, restrictions on the ability of the Borrower and the Restricted Subsidiaries to: (a) incur or guarantee additional indebtedness; (b) create or permit liens on assets; (c) consummate fundamental changes, including mergers, consolidations, and dissolutions; (d) make asset dispositions outside the ordinary course of business; (e) make restricted payments (subject to the baskets described in Section 4.12 above); (f) make investments; (g) enter into transactions with affiliates on other than arm's-length terms; and (h) enter into agreements restricting the ability of subsidiaries to pay dividends or make distributions. Each of these covenants is subject to customary carve-outs, baskets, and exceptions as more fully described in the Credit Agreement.
4.15 Sanctions, Anti-Corruption, and Anti-Money Laundering
The Credit Agreement includes representations, warranties, and affirmative covenants relating to compliance with Sanctions, anti-corruption, and anti-money laundering laws. Specifically, the Borrower and each other Loan Party represents and warrants that neither it, nor, to its knowledge, any of its directors, officers, employees, or agents, is a Sanctioned Person (as defined in the Credit Agreement), and that no part of the proceeds of the Term Loan B will be used, directly or indirectly, in violation of applicable Sanctions, including those administered by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), the U.S. Department of State, the United Nations Security Council, the European Union, or Her Majesty's Treasury of the United Kingdom, or any other relevant sanctions authority.
The Loan Parties further covenant to maintain policies and procedures designed to promote and achieve compliance with the USA PATRIOT Act (Title III of Pub. L. 107-56), the Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. §§ 78dd-1, et seq.), the Bank Secrecy Act (31 U.S.C. §§ 5311, et seq.), and all applicable anti-bribery and anti-corruption laws of the jurisdictions in which they operate.
5. Guarantors
The obligations of the Borrower under the Credit Agreement and the other Loan Documents are guaranteed by each of the following entities:
Holdings Guarantor:
Granite Peak NIH Holdings, LLC, a Delaware limited liability company and the direct parent of the Borrower. Holdings has pledged 100% of its equity interests in Nexford to the Collateral Agent.
Subsidiary Guarantors (11 entities):
1. Nexford Precision Components, Inc., a Delaware corporation
2. Nexford Engineered Systems, LLC, a Delaware limited liability company
3. Nexford Coatings & Surface Technologies, Inc., a Delaware corporation
4. Nexford Manufacturing Services, LLC, an Illinois limited liability company
5. Nexford Properties, LLC, a Delaware limited liability company
6. Nexford International Holdings, Inc., a Delaware corporation (CFC holdco — limited pledge of 65% voting equity and 100% non-voting equity of first-tier foreign subsidiaries, as described in Section 6 below)
7. Clearfield Tool & Die, Inc., a Pennsylvania corporation
8. Summit Industrial Fabrication Co., a South Carolina corporation
9. Ridgepoint Specialty Coatings, LLC, a Texas limited liability company
10. Lakeshore Precision Engineering, Inc., a Michigan corporation
The Board should note that Nexford Canada Holdings ULC, an unlimited liability company organized under the laws of British Columbia, and Nexford Canada Manufacturing, Inc., a corporation organized under the laws of Ontario, are excluded from the guarantee obligations as foreign subsidiaries and do not provide guarantees or security interests under the Loan Documents, consistent with market practice for Term Loan B transactions.
6. Security / Collateral Package
The obligations under the Credit Agreement are secured by a first-priority security interest (subject to customary permitted liens) in substantially all assets of the Borrower and each Guarantor. The collateral package includes the following:
Equity Interests:
• 100% of the equity interests in the Borrower (pledged by Holdings) and in each direct domestic subsidiary of the Borrower and each Guarantor.
• 65% of the voting equity and 100% of the non-voting equity of first-tier foreign subsidiaries, specifically Nexford Canada Holdings ULC (pledged by Nexford International Holdings, Inc.).
Personal Property:
Accounts receivable, inventory, equipment, intellectual property (including patents, trademarks, copyrights, and trade secrets), deposit accounts and securities accounts, general intangibles, material intercompany notes, chattel paper, instruments, investment property, letter of credit rights, commercial tort claims (to the extent in excess of specified thresholds), and all proceeds and products thereof.
Owned Real Property:
Four (4) owned real properties with individual fair market values in excess of $10,000,000 are subject to mortgage liens in favor of the Collateral Agent, as follows:
The mortgages for each of the four properties described above are post-closing deliverables under the Credit Agreement and are due to be recorded in the applicable county recording offices on or before April 30, 2025. Lender's title insurance policies for each mortgaged property are being issued by Landmark Title Assurance Company and are likewise due by April 30, 2025.
Excluded Assets:
Consistent with market practice, the following categories of assets are excluded from the collateral package: (a) motor vehicles and other titled goods with an individual book value below $250,000; (b) letter of credit rights with a face amount under $1,000,000; (c) commercial tort claims with a value under $2,500,000; and (d) any other assets as to which the Administrative Agent and the Borrower have mutually determined that the cost of pledging or perfecting a security interest therein would be excessive in relation to the benefit to the Lenders of the security to be afforded thereby.
7. Intercreditor Arrangement
In connection with the closing, the parties executed a First Lien/Unsecured Intercreditor Agreement (the "Intercreditor Agreement") among Crescent Harbor Bank, N.A., in its capacity as First Lien Collateral Agent under the Credit Agreement, Pinnacle Trust Company, in its capacity as trustee under the indenture governing the Senior Unsecured Notes, and Nexford Industrial Holdings Inc., as Borrower.
The Intercreditor Agreement establishes the priority of first lien secured claims relative to the unsecured claims of the holders of the Senior Unsecured Notes with respect to shared collateral, the application of enforcement proceeds, the exercise of remedies, and related matters. The Intercreditor Agreement is consistent with market terms for first lien/unsecured intercreditor arrangements in leveraged finance transactions.
In addition, the Credit Agreement includes provisions permitting the Administrative Agent, on behalf of the Lenders, to enter into a First Lien/Second Lien Intercreditor Agreement in the event that second lien indebtedness is incurred by the Borrower or any Guarantor in the future, subject to the terms and conditions of the Credit Agreement.
8. UCC Filings and Lien Perfection
UCC-1 Financing Statements naming Crescent Harbor Bank, N.A., as Collateral Agent, as secured party were filed on the Closing Date (or, in the case of certain jurisdictions, submitted for filing on the Closing Date with filing to be effective upon acceptance by the applicable filing office) with the following Secretaries of State and Departments of State:
• Delaware (Secretary of State of the State of Delaware) — for Nexford Industrial Holdings Inc., Granite Peak NIH Holdings, LLC, Nexford Precision Components, Inc., Nexford Engineered Systems, LLC, Nexford Coatings & Surface Technologies, Inc., Nexford Properties, LLC, and Nexford International Holdings, Inc.
• Illinois (Secretary of State of the State of Illinois) — for Nexford Manufacturing Services, LLC.
• Pennsylvania (Department of State of the Commonwealth of Pennsylvania) — for Clearfield Tool & Die, Inc.
• South Carolina (Secretary of State of the State of South Carolina) — for Summit Industrial Fabrication Co.
• Texas (Secretary of State of the State of Texas) — for Ridgepoint Specialty Coatings, LLC.
• Michigan (Department of State of the State of Michigan) — for Lakeshore Precision Engineering, Inc.
In addition to the UCC-1 filings, the following perfection actions were completed on or prior to the Closing Date:
• Deposit Account Control Agreements were executed by and among the applicable Loan Parties, the Collateral Agent, and each depositary bank with respect to the Borrower's and the Guarantors' deposit accounts. Specifically, control agreements were executed with Crescent Harbor Bank, N.A. (in its capacity as depositary bank) and Redstone National Bank (with respect to the Borrower's operating accounts ending in -4471, -4472, and -6633).
• Securities Account Control Agreements were executed by and among the applicable Loan Parties, the Collateral Agent, and each securities intermediary with respect to securities accounts maintained by the Loan Parties.
With respect to the release of the liens of the prior secured party, UCC-3 Termination Statements for all existing UCC-1 Financing Statements naming Atlas Meridian Bank, N.A. (as administrative agent and collateral agent under the prior credit agreement) as secured party are to be filed in all applicable jurisdictions (Delaware, Illinois, and Pennsylvania) on or before March 31, 2025, in accordance with the lien release authorization letter executed by Atlas Meridian Bank, N.A. on the Closing Date.
9. Refinancing of Existing Facilities
The proceeds of the Term Loan B were used, in part, to refinance and retire Nexford's existing senior secured credit facilities in their entirety. The existing credit facilities were governed by that certain Credit Agreement dated as of June 14, 2019 (as amended, the "Existing Credit Agreement"), among Nexford Industrial Holdings Inc., as borrower, the guarantors party thereto, Atlas Meridian Bank, N.A., as administrative agent and collateral agent, and the lenders from time to time party thereto, as amended by:
• the First Amendment to Credit Agreement, dated as of March 20, 2020;
• the Second Amendment to Credit Agreement, dated as of November 8, 2021;
• the Third Amendment to Credit Agreement, dated as of April 15, 2023; and
• the Fourth Amendment to Credit Agreement, dated as of September 12, 2024.
The following actions were taken with respect to the existing facilities on the Closing Date:
(a) Payoff of Existing First Lien Term Loan. The outstanding balance of the existing first lien term loan under the Existing Credit Agreement was repaid in full in the aggregate amount of $879,375,000, consisting of $875,000,000 in outstanding principal and approximately $4,375,000 in accrued and unpaid interest calculated through the Closing Date. Payment was made in accordance with the payoff letter delivered by Atlas Meridian Bank, N.A. (Sandra Vickers, Managing Director, Portfolio Management) and accepted by the Borrower.
(b) Termination of Existing Revolving Credit Facility. The existing $190,000,000 revolving credit facility under the Existing Credit Agreement was terminated as of the Closing Date. No revolving loans were outstanding under the existing revolving facility at the time of termination, and all revolving commitments thereunder were permanently terminated.
(c) Waiver of Prepayment Premium. Any prepayment premium that might otherwise have been payable in connection with the refinancing of the existing first lien term loan was waived pursuant to the provisions of the Fourth Amendment to Credit Agreement dated as of September 12, 2024, which expressly permitted the refinancing of the existing facilities without payment of any call premium or make-whole amount.
(d) Lien Release Authorization. Atlas Meridian Bank, N.A. executed a lien release authorization letter on the Closing Date authorizing the release of all liens and security interests held by or on behalf of Atlas Meridian Bank, N.A. and the existing lenders upon receipt of the payoff amount. All liens in favor of Atlas Meridian Bank, N.A. are to be terminated by the filing of UCC-3 Termination Statements in the States of Delaware, Illinois, and Pennsylvania on or before March 31, 2025.
10. Dividend Recapitalization
Concurrently with the closing of the Facility and the refinancing of the existing credit facilities, approximately $335,000,000 of the proceeds of the Term Loan B were distributed as a dividend from Nexford Industrial Holdings Inc. to its direct parent, Granite Peak NIH Holdings, LLC, and thence to Granite Peak Capital Fund IV, LP and GP Fund IV Co-Invest, LP, the indirect equity holders of the Borrower.
Following this distribution, cumulative cash distributions to Granite Peak Capital Partners, LP and its co-investors total approximately $610,000,000. This amount includes approximately $275,000,000 distributed in connection with the 2021 dividend recapitalization (funded under the Second Amendment to the Existing Credit Agreement) and the approximately $335,000,000 distributed in the current transaction.
For context, Granite Peak Capital Partners, LP's original equity investment at the time of the January 2019 acquisition of Nexford was approximately $725,000,000, representing the equity component of an enterprise value of approximately $1,650,000,000.
11. Key Documents Executed at Closing
The following principal transaction documents were executed and delivered on the Closing Date, March 28, 2025:
1. Credit Agreement, dated as of March 28, 2025, among Nexford Industrial Holdings Inc. (as Borrower), the Guarantors party thereto, Crescent Harbor Bank, N.A. (as Administrative Agent and Collateral Agent), Ironwood Capital Markets, LLC and Northvane Securities, Inc. (as Joint Lead Arrangers), and the Lenders from time to time party thereto.
2. Guarantee Agreement, dated as of March 28, 2025, among the Guarantors party thereto and Crescent Harbor Bank, N.A., as Collateral Agent.
3. Security Agreement (Personal Property), dated as of March 28, 2025, among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, N.A., as Collateral Agent.
4. Holdings Pledge Agreement, dated as of March 28, 2025, by Granite Peak NIH Holdings, LLC in favor of Crescent Harbor Bank, N.A., as Collateral Agent (pledging 100% of the equity interests in Nexford Industrial Holdings Inc.).
5. Borrower Pledge Agreement, dated as of March 28, 2025, by Nexford Industrial Holdings Inc. in favor of Crescent Harbor Bank, N.A., as Collateral Agent (pledging 100% of the equity interests in each direct domestic subsidiary of the Borrower).
6. Subsidiary Pledge Agreements, each dated as of March 28, 2025, by each Subsidiary Guarantor in favor of Crescent Harbor Bank, N.A., as Collateral Agent (pledging equity interests in lower-tier domestic subsidiaries).
7. CFC Holdco Limited Pledge Agreement, dated as of March 28, 2025, by Nexford International Holdings, Inc. in favor of Crescent Harbor Bank, N.A., as Collateral Agent (pledging 65% of the voting equity and 100% of the non-voting equity of Nexford Canada Holdings ULC).
8. intellectual Property Security Agreement, dated as of March 28, 2025, among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, N.A., as Collateral Agent.
9. Deposit Account Control Agreements, each dated as of March 28, 2025, among the applicable Loan Parties, Crescent Harbor Bank, N.A., as Collateral Agent, and each applicable depositary bank.
10. Securities Account Control Agreements, each dated as of March 28, 2025, among the applicable Loan Parties, Crescent Harbor Bank, N.A., as Collateral Agent, and each applicable securities intermediary.
11. Intercompany Note, dated as of March 28, 2025, pledged to Crescent Harbor Bank, N.A., as Collateral Agent.
12. First Lien/Unsecured Intercreditor Agreement, dated as of March 28, 2025, among Crescent Harbor Bank, N.A. (as First Lien Collateral Agent), Pinnacle Trust Company (as Unsecured Notes Trustee), and Nexford Industrial Holdings Inc.
13. UCC-1 Financing Statements, filed in all applicable jurisdictions as described in Section 8 above.
Complete copies of each of the foregoing documents are included in the closing binder and will be delivered to the Board promptly following the preparation of the final binder.
12. Closing Certificates and Opinions Delivered
In connection with the closing of the Facility, the following closing certificates and deliverables were executed and delivered by or on behalf of the Borrower, Holdings, and the Subsidiary Guarantors on the Closing Date:
• Closing Certificate of the Borrower, certifying that all conditions precedent to borrowing under the Credit Agreement have been satisfied.
• Officer's Certificate of the Borrower, executed by Michelle Kaplan, Chief Financial Officer, certifying that (i) the representations and warranties of the Borrower and the other Loan Parties set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects (or, in the case of representations and warranties qualified by materiality or Material Adverse Effect, in all respects) as of the Closing Date, and (ii) no Default or Event of Default has occurred and is continuing or would result from the initial borrowing and the application of proceeds thereof.
• Secretary's Certificates of the Borrower, Holdings, and each Subsidiary Guarantor, certifying as to (i) the incumbency and specimen signatures of each officer or authorized person executing the Loan Documents, (ii) the resolutions duly adopted by the applicable board of directors, managers, or members authorizing the transactions, and (iii) the organizational documents (certificate of incorporation, bylaws, limited liability company agreements, and certificates of formation, as applicable) of each Loan Party, certified as true and complete.
• Solvency Certificate, executed by Michelle Kaplan, Chief Financial Officer, certifying that, after giving pro forma effect to the transactions consummated on the Closing Date (including the incurrence of the Term Loan B, the refinancing of the existing credit facilities, the dividend distribution, and the payment of transaction fees and expenses), the Borrower and its subsidiaries, on a consolidated basis, are Solvent (as defined in the Credit Agreement), meaning that (a) the fair value of their assets exceeds the total amount of their liabilities (including contingent and unliquidated liabilities), (b) they are able to pay their debts as they become due, and (c) they do not have unreasonably small capital for the conduct of their business.
• Borrower's Certificate — Pro Forma Compliance, certifying pro forma compliance with the financial ratios and incurrence tests set forth in the Credit Agreement, including first lien net leverage of approximately 3.38x and total net leverage of approximately 4.03x, each below the applicable covenant thresholds.
• Borrower's Certificate — Use of Proceeds Compliance (Sanctions / OFAC / Anti-Corruption), certifying that the proceeds of the Term Loan B have been and will be used in accordance with the Credit Agreement and in compliance with all applicable Sanctions, OFAC regulations, and anti-corruption laws.
• Good Standing Certificates for all Loan Parties, obtained from the respective Secretaries of State (or equivalent authority) in each Loan Party's jurisdiction of organization, each dated within five (5) business days of the Closing Date.
• Certified copies of organizational documents for all Loan Parties, including certificates of incorporation, certificates of formation, bylaws, limited liability company agreements, and all amendments thereto.
• Board Resolutions of Nexford Industrial Holdings Inc., duly adopted on January 13, 2025, authorizing the Borrower's execution and delivery of the Credit Agreement and the other Loan Documents, the borrowing under the Term Loan B, and the consummation of the transactions contemplated thereby.
• Manager/Member Resolutions of Granite Peak NIH Holdings, LLC, duly adopted on January 13, 2025, authorizing Holdings' execution and delivery of the Guarantee Agreement, the Holdings Pledge Agreement, and the other Loan Documents to which it is a party.
• Resolutions of each Subsidiary Guarantor, duly adopted by the applicable board of directors, managers, or members, authorizing the execution and delivery of the Guarantee Agreement, the Security Agreement, the applicable Pledge Agreements, and the other Loan Documents to which each such entity is a party.
Legal Opinions Delivered
The following legal opinions were delivered on the Closing Date:
1. Legal Opinion of Calderwood & Harkness LLP — addressing the enforceability of the Credit Agreement, the Guarantee Agreement, the Security Agreement, and the other Loan Documents governed by New York law, and the absence of conflicts with applicable law and certain material agreements of the Loan Parties.
2. Legal Opinion of Calderwood & Harkness LLP — addressing the creation and perfection of security interests in personal property collateral under Article 9 of the Uniform Commercial Code as in effect in the State of New York.
3. Legal Opinion of Hargrove & Whitmore LLP (Robert Kimura, Partner) — addressing the enforceability of the Loan Documents under Illinois law and the perfection of security interests under the Illinois Uniform Commercial Code with respect to the Illinois-organized Loan Party.
4. Legal Opinion of Briarcliff Legal Group PA (Catherine Ellsworth, Partner) — addressing the due organization, valid existence, and good standing of each Delaware-organized Loan Party, and the corporate authority of such entities to enter into and perform their obligations under the Loan Documents.
13. Ratings
The following credit ratings were assigned to the Borrower and the Term Loan B facility on February 26, 2025, prior to the Closing Date:
The ratings reflect the agencies' assessment of the Borrower's credit profile, including pro forma leverage, cash flow generation, industry positioning, and the security package provided in connection with the Term Loan B. The one-notch uplift assigned by Sentinel Credit Analytics, LLC to the facility rating (BB- versus B+ corporate credit rating) reflects the significant first-priority collateral coverage afforded to the Term Loan B lenders.
14. Key Financial Metrics
For the Board's reference, the following key financial metrics were utilized in connection with the closing of the Facility, based on audited and management-reported financial data as of and for the twelve-month period ended December 31, 2024:
The permitted EBITDA add-backs of $28,000,000 consist of the following items, each of which has been reviewed and approved by the Administrative Agent in connection with the syndication process:
• Acquisition-related costs: $12,000,000
• Non-recurring restructuring charges: $8,500,000
• Sponsor management fees: $4,500,000
• Integration costs: $3,000,000
The estimated Year 1 cash interest expense of approximately $117,708,500 is based on an assumed average outstanding principal balance of approximately $1,393,000,000 (reflecting scheduled quarterly amortization) and an all-in interest rate of approximately 8.45% per annum (inclusive of Term SOFR, the applicable margin, and the credit spread adjustment). Actual interest expense will vary based on prevailing SOFR rates, the timing of any voluntary or mandatory prepayments, and the Borrower's election of interest periods.
15. Post-Closing Obligations
Certain deliverables were not completed as of the Closing Date and are required to be delivered on a post-closing basis in accordance with the Credit Agreement and the post-closing obligations schedule. The principal post-closing obligations are as follows:
• Mortgages. Mortgages in favor of Crescent Harbor Bank, N.A., as Collateral Agent, for each of the four mortgaged properties described in Section 6 above are to be recorded in the applicable county recording offices (Cook County, Illinois; Winnebago County, Illinois; Greenville County, South Carolina; and Harris County, Texas) on or before April 30, 2025.
• Lender's Title Insurance Policies. Lender's title insurance policies for each mortgaged property, to be issued by Landmark Title Assurance Company, are to be delivered to the Collateral Agent on or before April 30, 2025.
• UCC-3 Termination Statements. UCC-3 Termination Statements terminating all existing UCC-1 Financing Statements naming Atlas Meridian Bank, N.A. as secured party are to be filed in the States of Delaware, Illinois, and Pennsylvania on or before March 31, 2025.
• Original Executed Documents. Delivery of original executed counterparts of all Loan Documents to the Administrative Agent and the Collateral Agent is to be completed promptly following the Closing Date.
Calderwood & Harkness LLP has issued a separate post-closing obligations letter dated March 31, 2025, addressed to the Borrower, detailing all outstanding deliverables, the responsible parties, and the applicable deadlines. We are actively coordinating with Nexford's management, the Administrative Agent, and the title company to ensure timely satisfaction of all post-closing obligations.
16. Advisors and Counsel
The following advisors and counsel participated in the transaction:
Borrower's Counsel:
Calderwood & Harkness LLP Claudia Merritt, Responsible Partner Ian Blackwood, Billing Partner Marcus Leung, Lead Associate Sophie Tremblay, Working Associate Sylvia Hartwell, Tax
Arranger's / Agent's Counsel:
Whitfield & Gage LLP Margaret Ashby, Lead Partner Jonathan Ferris, Associate
Sponsor's Counsel:
Kellner Brandt & Associates LLP Patricia Voss, Lead Partner