Ferro lowers revolving loan commitments to $250 million, amends terms

By Toni Weeks

San Luis Obispo, Calif., March 28 - Ferro Corp. said it amended its existing senior credit facility to reduce the revolving loan commitments to $250 million from $350 million.

According to a press release, the amendment reflects a further benefit achieved through the company's strategy to divest its solar pastes assets, the sale of which increased operating cash flows and reduced Ferro's precious metal consignment program and other working capital needs.

The amendment, unanimously approved by the company's bank group, will lower annual commitment fees by about $500,000 and modify some financial and leverage ratio covenants.

According to an 8-K filing with the Securities and Exchange Commission, the amendment, among other things, completes the following:

• Amends the calculation of EBITDA to provide for a restructuring expense add-back attributable to the company's restructuring program of $30 million in 2013, $20 million in 2014 and $10 million in 2015, with no aggregate limit on restructuring expenses;

• Amends the permitted leverage ratio such that it will increase from 3.50 to 4.25 for the first, second and third quarters of 2013, to 4.00 for the fourth quarter of 2013, to 3.75 for the second and third quarters of 2014, and to remain at 3.50 for the fourth quarter and thereafter; and

• Requires the company to have a minimum liquidity of $100 million and a senior secured leverage ratio of less than 1.50 in order to be permitted to consummate an acquisition.

"Between cash on hand and expected cash from operations, we believe Ferro has sufficient cash resources to fully fund the initiatives now underway to reduce operating costs by over $50 million by the end of 2014," interim president and chief executive officer Peter Thomas said in the release.

"By amending Ferro's credit facility, very little of which currently has been utilized, we have gained significant additional financial flexibility to expand upon our cost savings programs and execute on other initiatives in our value creation strategy."

PNC Bank, NA is the administrative agent and collateral agent.

The Mayfield Heights, Ohio, company is a supplier of technology-based performance materials for manufacturers.

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