Share Buyback / Credit AgreementBased on the original credit agreement with CIT, share buybacks and dividends were not permitted. Perhaps someone else can read to confirm. The company would have to have gotten a waiver to do execute the buyback. Perhaps this is why they haven't purchased any.
Relevant section is 7.06 in the Credit Agreement. I've also included the definition of Restricted Payments below. 7.06 is part of the Negative Covenants section - i.e. cannot do. the exceptions are below.
7.06 Restricted Payments. Directly or indirectly declare or make any Restricted Payment or incur any obligation to do so, except that:
(a) each Subsidiary of the Borrowers may make Restricted Payments (directly or indirectly) to any Loan Party (other than Holdings) or any Borrower;
(b) each applicable Loan Party and each Subsidiary may make regularly scheduled payments of interest permitted under the Subordinated Indebtedness if such payment is permitted under the terms of the Subordination Agreement and no Default or Event of Default shall have occurred and remains outstanding on the date on which such payment occurs or would occur as a result thereof; and
(c) the Borrowers may make dividend payments or distributions to Holdings, which Holdings may distribute or pay to any direct or indirect parent thereof, provided, each of the following conditions must be satisfied both prior to and after giving effect to such Restricted Payment: (i) no Default or Event of Default exists, (ii) the Borrowers demonstrate to the satisfaction of Administrative Agent that they are in compliance on a Pro Forma Basis with the financial covenants set forth in Article 8 recomputed for the most recently ended Fiscal Quarter after giving effect to such proposed Restricted Payment, (iii) Borrowers have given not less than ten (10) days prior written notice of such Restricted Payment to Administrative Agent before such Restricted Payment is made, (iv) Borrowers deliver to Administrative Agent a certificate signed by a Responsible Officer certifying that all conditions specified in this clause (c) and in Section 4.02 (as applicable) have been satisfied, and (v) such Restricted Payments shall not exceed $2,000,000 per annum in the aggregate.
“Restricted Payment” means (a) any dividend or other distribution, direct or indirect, on account of any shares (or equivalent) of any class of Capital Stock of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Capital Stock of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (d) any payment or prepayment of principal of, premium, if any, or interest on, redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Indebtedness of any Loan Party or any of its Subsidiaries, and (e) any payment from any Loan Party to Holdings or Ultimate Parent not expressly permitted by Section 7.06.