Ferro amends loan, revising maturity, pricing and covenants

By Sara Rosenberg

New York, Oct. 27 - Ferro Corp. amended its credit facility, extending the revolver maturity to June 6, 2012, converting $100 million of the revolver into a new term loan also due June 6, 2012, increasing pricing and revising covenants, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Pricing on term loans is Libor plus 600 basis points, up from previous pricing of Libor plus 200 bps, and pricing on revolver loans can range from Libor plus 450 bps to 600 bps based on leverage, with the initial rate set at Libor plus 600 bps.

Covenant modifications included setting the maximum permitted leverage ratio to range from 3.50:1 to 5.75:1 depending on the quarter, setting the minimum permitted fixed-charge coverage ratio to range from 1.0:1 to 1.1:1 depending on the quarter, and eliminating the minimum EBITDA requirement.

In addition, the amendment requires the company to use net proceeds from dispositions to repay outstanding revolving loans and term loans.

The amendment also steps down the portion of the annual excess cash flow required to be used to repay outstanding loans depending on the leverage ratio and increases to $50 million the amount of debt that company's foreign subsidiaries may incur if the total leverage ratio is 3.50:1 or less.

Credit Suisse is the term loan administrative agent and PNC Bank is the revolver administrative agent.

The amendment was completed on Oct. 26, but will only become effective once the company raises $150 million from a common stock offering.

At least $50 million of the proceeds from the equity offering must be used to repay term loans.

And, the company plans to use at least $50 million from the 29.5 million stock offering that was announced on Tuesday to pay the costs associated with its restructuring programs and strategic initiatives.

Cleveland-based Ferro is a supplier of technology-based performance materials for manufacturers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.