Reliance Steel amends $1.5 billion revolver, adds $500 million loan

By Susanna Moon

Chicago, April 4 - Reliance Steel & Aluminum Co. said it amended its $1.5 billion unsecured revolving credit facility, which has a term of five years expiring April 4, 2018, and added a $500 million term loan.

The revolver also includes an upsize option for up to an additional $500 million, according to a company press release.

BofA Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC were the joint lead arrangers and book managers. Bank of America NA is the administrative agent, and JPMorgan Chase Bank, NA and Wells Fargo Bank, NA are co-syndication agents.

Both facilities allow for prepayments, the release noted.

"These financing transactions are a significant step in obtaining the financing necessary to complete our previously announced acquisition of Metals USA that we expect to close in the 2013 second quarter," David H. Hannah, chairman and chief executive officer of Reliance, said in the release.

"The bank markets remain favorable and we are happy with the pricing and other terms under the new facility. We appreciate the continued support of the syndicate of 26 banks involved in our credit facility."

Merger financing

The company said on Feb. 7 that it would use its existing $1.5 billion credit facility, new bank debt and the debt capital markets to fund the acquisition of Metals USA Holdings Corp.

The company stated at the time that this expected financing would pay for the transaction, which gives an enterprise value of $1.2 billion to Metals USA, refinance Metal USA's debt and provide additional liquidity to allow Reliance to support and continue to grow its operations.

On a pro forma basis giving effect to the transaction, Reliance's net debt-to-total capital ratio is expected to be about 42%, which is in line with the company's targeted leverage, a previous release said.

Under the merger agreement, Reliance is offering $20.65 per share in cash.

The transaction is expected to close in the second quarter.

The merger has been unanimously approved by the companies' boards.

Reliance previously said that it plans to operate Metals USA under its current brand names.

Reliance Steel is the largest metals service center company in North America. It is based in Los Angeles. Ft. Lauderdale, Fla.-based Metals USA provides products and services in the heavy carbon steel, flat-rolled steel, non-ferrous metals and building products markets.

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