Adams Resources gets $85 million of financing via Cadence Bank

By Mary-Katherine Stinson

Lexington, Ky., Nov. 1 – Adams Resources & Energy, Inc. and wholly owned subsidiaries GulfMark Asset Holdings, LLC and Service Transport Co. as borrowers and Cadence Bank as administrative agent, swingline lender and issuing lender entered into a credit agreement on Oct. 27 providing a revolving credit facility allowing borrowings up to $60 million and a $25 million term loan, according to an 8-K filing with the Securities and Exchange Commission.

Borrowings under the revolver and the term loan bear interest at SOFR plus 200 basis points and 300 bps depending on the company’s consolidated total leverage ratio. Interest starts at SOFR plus 225 bps, at the second tier.

There is a commitment fee of 25 bps for the revolver.

The company may obtain letters of credit under the revolving credit facility up to $30 million with the outstanding letters of credit reducing availability under the revolver.

The revolving credit facility matures Oct. 27, 2027.

The term loan also matures Oct. 27, 2027 and amortizes on a 10-year schedule.

There is no prepayment penalty for the term loan. It must be prepaid with proceeds from any future debt issuance in which the proceeds exceed $2 million in any quarter with limited exceptions. Proceeds of certain asset dispositions must also be used to repay the term loan.

The agreement replaces the borrowers’ $60 million credit facility with Wells Fargo Bank, NA entered May 4, 2021.

In connection with the termination of the credit facility the borrowers and Wells Fargo deposited cash equaling 103% of the face value of three letters of credit previously issued by Wells Fargo in May 2021. The three letters of credit are fully collateralized, have no associated debt, and no draws against any of the letters of credit are pending.

Also on Oct. 31 the company entered into a stock repurchase agreement with its largest stockholder KSA Industries, Inc. and family members of the late company founder, Kenneth Stanley Adams, Jr., to purchase a total of 1,942,433 shares of its common stock for an aggregate purchase price of $69.9 million, equaling $36.00 per share.

The purchase was funded with the proceeds of the $25 million term loan.

Adams is a Houston-based company primarily engaged in crude oil marketing, transportation and storage and tank truck transportation of liquid chemicals and dry bulk.

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