AdvanSix gets $425 million revolver, term loan to help fund spinoff

By Marisa Wong

Morgantown, W.Va., Oct. 3 – AdvanSix Inc. entered into a $425 million credit agreement on Friday in connection with its spinoff from Honeywell International Inc., according to an 8-K filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch, JPMorgan Chase Bank, NA, SunTrust Robinson Humphrey, Inc., PNC Bank, NA and Fifth Third Bank are joint lead arrangers and joint bookrunners. JPMorgan Chase Bank, SunTrust Bank, PNC Bank and Fifth Third Bank are co-syndication agents; Bank of America, NA is administrative agent; and Citizens Bank of Pennsylvania is documentation agent.

The credit facilities consist of a $270 million senior secured term loan and a $155 million senior secured revolving credit facility. AdvanSix used the term loan proceeds to pay a $270 million dividend to Honeywell in connection with the spinoff.

The facilities mature on Sept. 30, 2021.

The term loan is subject to quarterly principal payments of 1.25% of the aggregate amount outstanding on the closing date, beginning with the fiscal quarter ending Dec. 31, 2017, stepping up to 2.5% for each quarter after Sept. 30, 2018.

The agreement allows the company to use up to $25 million of the revolver for the issuance of letters of credit and up to $20 million for swingline loans.

The company has the option to incur additional term loans or increase the amount of the revolver in an aggregate principal amount of up to the sum of $150 million plus an amount such that the company’s consolidated senior secured leverage ratio would not be greater than 1.75 to 1.

Borrowings bear interest at Libor plus a margin ranging from 225 basis points to 300 bps, depending on the company’s consolidated leverage ratio. The company is also required to pay a commitment fee for unused commitments under the revolver at a rate of 25 bps to 40 bps, depending on the consolidated leverage ratio. The initial margin is 250 bps, and the initial commitment fee is 30 bps.

In addition, the credit agreement contains financial covenants that require the company to maintain a consolidated interest coverage ratio of not less than 3 to 1 and a consolidated leverage ratio of 3 to 1 or less for the fiscal quarter ended Sept. 30 through and including the fiscal quarter ending March 31, 2018, 2.75 to 1 or less for the fiscal quarter ending June 30, 2018 through and including the fiscal quarter ending March 31, 2019 and 2.50 to 1 or less for the fiscal quarter ending June 30, 2019 and each quarter after that.

As of the closing date, the company has borrowed $40 million under the revolver. The company expects to use the revolver to meet any ongoing cash needs in excess of internally generated or available cash flows and to issue letters of credit in the ordinary course of its business.

AdvanSix manufactures a polymer resin, Nylon 6. The company is based in Morris Plains, N.J. Honeywell is a technology and manufacturing company based in Morristown, N.J.

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