EnPro increases credit facility by $200 million in the third quarter

By Devika Patel

Knoxville, Tenn., Nov. 5 – EnPro Industries Inc. revised its capital structure last quarter by increasing its credit facility by $200 million through a term loan A and revolving credit facility expansion.

“We continue to have a well-balanced capital structure with a favorable mix of pre-payable floating-rate debt and long-term fixed-rate bonds,” executive vice president and chief financial officer Milt Childress said on the company’s third quarter ended Sept. 30 earnings conference call on Tuesday.

“During the quarter, in conjunction with the LeanTeq acquisition, we increased our credit facility by $200 million through a combination of $150 million term loan A and an expansion of our revolver capacity from $350 million to $400 million,” Childress said.

Adjusted EBITDA was $54.8 million for the third quarter of 2019, compared to $64.3 million for the third quarter of 2018.

As of Sept. 30, the company had a cash balance of about $112 million and borrowings were approximately $666 million.

At the end of the quarter, the company had about $213 million of availability under its revolving credit facility.

EnPro’s adjusted net debt to proforma EBITDA ratio was about 2.6x at the end of the quarter.

On Sept. 25, EnPro amended its credit agreement to provide for a new $150 million five-year term loan A and an upsized $400 million five-year revolving credit facility.

Previously, the revolver was sized at $350 million.

BofA Securities, Inc. was the bookrunner and was a lead arranger along with Fifth Third Bank and KeyBank NA.

Bank of America, NA acted as the administrative agent, with Wells Fargo Bank, NA, Fifth Third and KeyBank as syndication agents.

EnPro may seek incremental term loans or additional revolving commitments in an amount equal to the greater of $225 million and 100% of consolidated EBITDA for the most recently ended four-quarter period for which the company has reported financial results, plus additional amounts based on a consolidated senior secured leverage ratio.

Borrowings initially bear interest at Libor plus 150 basis points, although the margin above Libor may range from 125 bps to 175 bps, based on a consolidated total net leverage ratio.

The revolving commitment fee is initially 17.5 bps and may range from 15 bps to 22.5 bps, depending on leverage ratio.

The term loan will amortize quarterly in an annual amount equal to 2.5% of the original principal amount of the term loan facility in each of years one through three, 5% in year four and 1.25% in each of the first three quarters of year five, with the remaining outstanding amount payable at maturity.

Proceeds were used to help fund Enpro’s acquisition of LeanTeq and LeanTeq Co., Ltd. for $305 million.

Additional proceeds may be used for working capital and general corporate purposes.

EnPro is a Charlotte, N.C.-based manufacturer of highly engineered industrial products.

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