Dynamic Materials amends credit facility, temporarily lowers dividend

By Tali Rackner

Norfolk, Va., Dec. 18 – Dynamic Materials Corp. entered into an amendment to its credit agreement dated as of Feb. 23, 2015 to reduce availability and temporarily reduce financial covenants, according to an 8-K filing with the Securities and Exchange Commission.

The company reduced the amount of U.S. borrowings available under the agreement to $65 million from $90 million.

As of Sept. 30, the outstanding borrowings totaled $36 million.

In addition, the maximum debt-to-EBITDA leverage ratio was raised to 3.75 times from 3 times through June 30, 2016; adjusting to 3.25 times through Sept. 30, 2016; and returning to 3 times thereafter. If the leverage ratio is greater than 3 times, the interest margin will be Libor plus 275 basis points and an undrawn fee of 50 bps will be applied.

Dynamic also announced an early termination of its ability to borrow funds as a term loan. There have been no borrowings against this feature, which was scheduled to terminate in February 2016.

Furthermore, the dividend rate may not be increased unless the leverage ratio is less than 2 times.

“We have closely monitored activity in our core energy markets, and determined the sharp slowdown in well completion activity combined with the near-term financial impact of our consolidation programs could push our leverage and debt-service-coverage ratios beyond the levels allowed for in our credit agreement,” president and CEO Kevin Longe said in a press release.

“We approached our commercial lenders early in the fourth quarter to address these issues. We are very pleased with the terms of our amended credit agreement and the financial flexibility they will provide during the coming year.”

Separately, the company temporarily lowered its quarterly cash dividend to $0.02 per share from $0.04 per share.

“Given the near-term uncertainty in our end markets, we are taking a conservative approach to expenditures and are focused on capital preservation and funding the company’s operations from operating cash flow,” Longe added in the release.

Dynamic Materials is a Boulder, Colo.-based company that operates in technical product and process businesses serving the energy, industrial and infrastructure markets.

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