Anixter amends revolver to lower fixed-charge coverage ratio, reduce size to $350 million

By Angela McDaniels

Tacoma, Wash., July 28 - Anixter International Inc. said its wholly owned subsidiary, Anixter Inc., has amended its senior unsecured revolving credit agreement, reducing the size of the facility to $350 million from $450 million.

The following key changes were made to the revolver:

• The consolidated fixed-charge coverage ratio was amended to require minimum coverage of 2.25 times through Sept. 30, 2010, 2.5 times from October 2010 through December 2011 and 3 times after that. Before the amendment, the required ratio was 3 times for each of these periods;

• Anixter is required to have, on a pro forma basis, a minimum of $50 million of availability under the revolver at any time it elects to prepay, purchase or redeem Anixter International debt;

• Anixter is allowed to upstream funds to Anixter International for the payment of dividends and share repurchases up to a maximum of $150 million plus 50% of Anixter's cumulative net income from the date of the amendment forward; and

• The ratings-based pricing grid has been adjusted so that the all-in drawn cost of borrowings, based on Anixter's current credit ratings of BB+/Ba2, is now Libor plus 250 basis points on all borrowings. Previously, it was Libor plus 75 bps on the first $350 million borrowed and Libor plus 100 bps on the next $100 million borrowed. The margin over Libor can vary from 125 to 250 bps as ratings vary from above BBB+/Baa1/BBB+ down to below BB-/Ba3/BB-.

Anixter International said the changes, effective July 23, were made in response to the impact of the current soft economic environment.

All other material terms and conditions remain unchanged, including the April 2012 maturity.

Bank of America, NA is administrative agent.

At the end of the second quarter, the company had outstanding borrowings of $94.6 million under the revolver.

"At the end of the second quarter, the company was in full compliance with all of the then-existing covenants. However, the lack of a seasonal sales pick-up in the second quarter of this year and the resulting lower earnings, combined with the still uncertain economic outlook, increased the probability that the company would violate the fixed charge coverage covenant at a future date," Dennis Letham, executive vice president - finance, said in the release.

"The revised fixed-charge coverage ratio provides a cushion not only against a continuation of the current economic environment, but also against the possibility of yet unseen economic deterioration."

Anixter also renewed its accounts receivable securitization program for a new 364-day period ending in July 2010. As a part of the renewal, the size of the facility was reduced to $200 million from $255 million to bring it in line with the size of the current receivable collateral base.

Anixter International is a Glenview, Ill.-based distributor of communication products, electrical and electronic wire and cable, fasteners and other small parts.

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