Reliance Steel details $1.5 billion revolver, $600 million term loan

By Tali Rackner

Norfolk, Va., Oct. 4 – Reliance Steel & Aluminum Co. detailed its new $2.1 billion five-year credit agreement in an 8-K filing with the Securities and Exchange Commission.

The agreement is comprised of a $1.5 billion revolving credit facility and a $600 million term loan.

The revolver includes a $150 million letter-of-credit sublimit and a $20 million swingline loan sublimit. It may be increased by up to an additional $500 million.

Loans under the credit agreement initially bear interest at Libor plus 125 basis points. After Dec. 31, the margin over Libor will range from 75 bps to 150 bps, based on the company’s total leverage ratio.

The revolver contains an unused fee of 15 bps until Dec. 31, when it will range from 12.5 bps to 20 bps, also depending on leverage.

The senior credit facilities may be prepaid at any time without premium. The term loan facility will amortize at a rate of 5% per annum in first and second years after funding (payable in equal quarterly installments) and 10% per annum in the third, fourth and fifth years (payable in equal quarterly installments) with the outstanding balance to be paid at maturity.

The credit agreement matures on Sept. 30, 2021.

The new credit agreement replaces the company's existing credit agreement. A portion of the term loan proceeds were used to prepay outstanding loans under this agreement.

Reliance Steel intends to use revolver proceeds to retire $350 million of 6.2% senior notes when they mature on Nov. 15, 2016.

At closing, after giving effect to the rollover of letters of credit outstanding under the existing credit agreement, the company had about $1.07 billion of availability under the revolver, which may be used to provide ongoing working capital and for other general corporate purposes.

Bank of America NA is the administrative agent and JPMorgan Chase Bank, NA and Wells Fargo Bank, NA are co-syndication agents. PNC Bank, NA and TD Bank, NA are co-documentation agents. Bank of America Merrill Lynch, JPMorgan and Wells Fargo Securities, LLC are joint lead arrangers and bookrunners.

The metals service center company is based in Los Angeles.

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