Ferro loosens some financial covenants under credit facility with PNC

By Susanna Moon

Chicago, June 19 - Ferro Corp. eased some financial covenants under its senior credit facility, lifting the permitted leverage ratio to 4.25 times for the third and fourth quarters and scrapping the fixed charge coverage covenant.

The company amended its credit agreement on Friday with PNC Bank, NA as the administrative agent and the collateral agent, according to an 8-K filing with the Securities and Exchange Commission.

The amendments also include a quarterly interest coverage covenant that requires the company to maintain an interest coverage ratio of at least 2.50 for the second and third quarters of 2012, 2.75 for the fourth quarter of 2012 and 3.00 for the first quarter of 2013 and thereafter.

A covenant also limits the capital expenditures of the company to

• $20 million for the three-month period ending June 30;

• $35 million for the six-month period ending Sept. 30;

• $50 million for the nine-month period ending Dec. 31, 2012;

• $65 million for the 12-month period ending March 31, 2013; and

• $65 million for the 2013 fiscal year and each fiscal year after that. Some unused capital expenditures may be carried forward to the following fiscal year.

The company also amended the calculation of EBITDA to allow adding back some restructuring expenses that may be incurred in 2012, 2013 and 2014 and expenses incurred in connection with the implementation of the company's initiative to standardize and simplify its global business processes and upgrade its internal management information systems.

The company is also permitted to guarantee lines of credit obtained by its foreign subsidiaries.

The company paid a 0.05% amendment fee.

Ferro is Mayfield Heights, Ohio-based producer of specialty materials and chemicals.

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