Quanex enters $150 million term loan B, up to $300 million revolver

By Tali Rackner

Norfolk, Va., Aug. 1– Quanex Building Products Corp. entered into a $450 million five-year senior secured credit facility on Friday with Wells Fargo Bank, NA as administrative agent and swingline lender, according to an 8-K filing with the Securities and Exchange Commission.

The facility consists of a $150 million term loan A and an up to $300 million revolving credit facility.

There is a $15 million sublimit for letters of credit, a $15 million sublimit for swingline loans and an up to $150 million accordion option.

Borrowings initially bear interest at Libor plus 200 basis points, with the spread over Libor ranging from 150 bps to 225 bps, based on leverage.

The term loan portion will amortize in equal quarterly installments of 5% during the first year, 10% during years two through four and 15% during year five, with the entire unpaid balance due at maturity.

Quanex is required to maintain a maximum consolidated leverage ratio of 3.5 times from closing through Jan. 30, 2017; 3.25 times through Jan. 30, 2018 and 3 times thereafter, with the maximum ratio amount subject to an optional 0.5 time increase for four quarters following the consummation of a permitted acquisition. It is also required to maintain a minimum a consolidated fixed charge coverage ratio of 1.1 times.

The facility matures on July 29, 2021.

At closing, there were about $300 million of borrowings outstanding under the new agreement.

Wells Fargo Securities, LLC and Bank of America Merrill Lynch acted as joint lead arrangers and bookrunners; Bank of America is the syndication agent; and BMO Harris Bank, NA, Citibank, NA, Citizens Bank, NA, Fifth Third Bank, JPMorgan Chase Bank, NA, Regions Bank, SunTrust Bank and U.S. Bank NA are co-documentation agents.

The new agreement replaces the company’s existing $310 million term loan B and $100 million asset-based lending facility. In connection with the termination of the previous facility, Quanex repaid a total of $313,703,931, which included a 1% prepayment call premium.

Quanex is a Houston-based supplier of window and door components.

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