Resolute Forest Products term loan, revolver pricing detailed in 8-K

By Wendy Van Sickle

Columbus, Ohio, Sept. 13 – Resolute Forest Products Inc.’s new $185 million senior secured credit agreement has an initial interest rate of Libor plus 200 basis points for term loans and Libor plus 162.5 bps for revolving loans, according to details released in an 8-K filing with the Securities and Exchange Commission on Tuesday.

As previously reported, the Sept. 7 agreement includes a $46.25 million nine-year term loan and a $138.75 million six-year revolving credit facility. The credit agreement also provides for the company to increase the facilities by up to $175 million.

Interest for term loans can range from Libor plus 187.5 bps to Libor plus 250 bps, and for revolving loans interest can range from Libor plus 150 bps to Libor plus 212.5 bps, in each case based on the company’s capitalization ratio.

The revolver has a 32.5 bps initial commitment fee, which drops to 27.5 bps when average daily utilization of the revolver for the prior fiscal quarter is greater than 35% of the total commitments.

The revolver matures on Sept. 7, 2022, and the term loan matures on Sept. 7, 2025.

The new financing was arranged and syndicated by American AgCredit.

The company is required to maintain a maximum capitalization ratio of 45%, available liquidity of at least $100 million and a minimum collateral coverage ratio of 1.8 times.

"We took advantage of favorable market conditions to increase our already solid liquidity levels by 50% to about $535 million,” Jo-Ann Longworth, Resolute senior vice president and chief financial officer, said in a news release announcing the financing.

“These new facilities provide us flexible terms and conditions, long maturities and no repayment penalties.”

In the near term, the company plans to use proceeds of the new credit facilities to repay most of the current balance on its existing ABL revolving credit facility. Both the existing and the new revolving credit facilities will then be used for general corporate purposes, including to complete funding requirements related to Resolute’s tissue project at its Calhoun mill in Tennessee.

Resolute's obligations under the facilities are guaranteed by some of its material U.S. subsidiaries and are secured by first-priority liens on assets at the Calhoun mill.

Resolute Forest Products is a Montreal-based pulp and paper manufacturer.

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