14. SUBSEQUENT EVENTS

Amended Credit Agreement

On April 1, 2018, the Company entered into an amendment to its credit agreement with PNC Bank, National Association, as administrative agent, and the lenders party thereto. The amendment increased the revolving credit facility up to an aggregate maximum principal amount of $400,000, added a new term loan credit facility in an aggregate principal amount of $100,000, and increased the accordion feature to permit the increase of the A&R Facility by up to an additional $200,000. The credit facilities are available through April 3, 2023.

The amendment was entered into contemporaneously with the transfer of substantially all of the Company’s hydraulics segment assets to the Company’s wholly-owned subsidiary, Sun Hydraulics, LLC, a newly-formed Florida limited liability company, and in preparation for the acquisition of Faster S.p.A. Sun Hydraulics, LLC was added as an additional guarantor of the amended facility.  In addition, Sun Hydraulics, LLC joined the existing Security Agreement between the Company, Enovation and the Bank, for the benefit of the lenders, granting a security interest in substantially all of their respective assets.

In connection with the acquisition of Faster, S.p.A. on April 5, 2018, the term loan was fully funded and the Company borrowed $258,000 on the revolving credit facility.

Acquisition of Faster S.p.A.

On April 5, 2018, the Company completed its acquisition of all the outstanding equity interests of Polyusus Lux IV S.à.r.l., a Luxembourg limited liability company, the owner of 100% of the share capital of Faster S.p.A., an Italian joint stock company. The acquisition was pursuant to the Share Purchase Agreement, dated February 18, 2018, among the Company, Capvis IV Co-Investors Faster L.P., a Jersey limited partnership and certain co-investors, which together owned all the shares of Polyusus Lux IV S.à.r.l.

The cash consideration paid at closing was approximately €430,000, approximately $528,000, plus other charges and deductions from the purchase price as set forth in the Purchase Agreement. The acquisition was funded with $358,000 of borrowings on the Company’s credit facility and cash on hand.

Faster is a leading global manufacturer of quick-release hydraulic coupling solutions and is engaged in the business of designing, engineering and distributing hydraulic coupling solutions focused in the agriculture, construction equipment and industrial markets.  Its primary markets include agriculture, construction equipment and general industrial applications.  Headquartered in Milan, Italy, Faster has manufacturing operations co-located with its headquarters as well as in Toledo, Ohio and Pune, India.  Additionally, the company has sales offices in Shanghai, China; São Paulo, Brazil; and Langenfeld, Germany.

The Company believes the acquisition of Faster is in alignment with its Vision 2025 goals, advancing the Company as a global technology leader in the industrial goods sector while maintaining superior profitability and financial strength.  Faster further diversifies the Company more deeply into the growing global agriculture market and broadens the Company’s global footprint, advancing its ‘in the region, for the region’ initiative.”

Based on the preliminary analysis of applying the conversion to U.S. generally accepted accounting principles, Faster recorded 2017 sales of €105,000 and net income of €11,000. The acquisition is expected to be accretive to GAAP earnings in 2018 and beyond. It is not currently practicable to disclose pro forma results of operations or financial position, as the accounting for the acquisition is currently incomplete.