Waterjet enters asset-based revolver upon acquiring Flow International

By Marisa Wong

Madison, Wis., Feb. 3 - Waterjet Holdings, Inc. and some of its subsidiaries, including newly acquired Flow International Corp., entered into an asset-based revolving credit facility on Jan. 31 in connection with Waterjet's acquisition of Flow International, according to an 8-K filing with the Securities and Exchange Commission.

Ally Commercial Finance LLC is the agent, lead arranger and lead bookrunner for the up to $50 million ABL facility, which includes a letter-of-credit sub-facility and a swingline loan sub-facility.

Interest is equal to Libor plus an applicable margin, subject to a 1% Libor floor.

Waterjet is also required to pay an unused line fee of 50 bps.

The borrowing base is calculated on a monthly basis and is equal to the sum of 80% of accounts receivable and 60% of the value of inventory.

If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit exceeds the lesser of the commitment amount and the borrowing base, Waterjet is required to repay outstanding loans and/or cash collateralize letters of credit in an aggregate amount equal to that excess, with no reduction of the commitment amount.

The company will generally be required to repay outstanding loans with cash proceeds from the sale of any collateral that secures the facility on a senior-priority basis.

Voluntary prepayments and commitment reductions are permitted, in whole or in part, without premium or penalty.

There is no scheduled amortization under the ABL facility, and the available commitment may be borrowed, repaid and reborrowed without restriction. All outstanding loans are due and payable in full five years after the closing date.

If undrawn availability is less than $10 million, the revolver requires that Waterjet comply with a maximum consolidated total net leverage ratio covenant. In addition, the facility includes a number of negative covenants.

In connection with the closing of the merger, the company repaid in full and terminated its third amended and restated credit agreement with Bank of America, NA, the filing noted.

Waterjet is an affiliate of New York-based American Industrial Partners, a private equity firm that invests in North American-based industrial businesses. Based in Kent, Wash., Flow is a developer and manufacturer of industrial waterjet systems for cutting and cleaning applications.

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