Resolute Forest Products details amended ABL revolver due 2024

By Marisa Wong

Morgantown, W.Va., May 20 – Resolute Forest Products Inc. disclosed more details on its recently amended credit agreement in an 8-K filed Monday with the Securities and Exchange Commission.

Resolute Energy entered into a second amendment on May 14 to its credit agreement dated May 22, 2015 with Bank of America, NA as U.S. administrative agent and Bank of America, NA, Canada branch, as the Canadian administrative agent.

The amended credit agreement extends the maturity date of the company’s $500 million senior secured asset-based revolver to May 14, 2024.

The $500 million aggregate lender commitment represents a $100 million voluntary reduction by the company.

The facility continues to include a $60 million swingline sub-facility and a $200 million letter-of-credit sub-facility.

The facility now features a $300 million tranche available to the U.S. borrowers and the Canadian borrower, instead of a $450 million tranche under the original credit agreement, and a $200 million tranche available solely to the U.S. borrowers, instead of a $150 million tranche previously.

The amended credit agreement continues to allow the borrowers to periodically reallocate all or a portion of the commitments under the U.S. sub-facility or the Canadian sub-facility to the other sub-facility.

In addition, the company may convert up to $50 million of the commitments under either the U.S. sub-facility or the Canadian sub-facility to a first-in last-out facility.

The amended credit agreement continues to provide for an uncommitted ability to increase the revolver by up to $500 million.

Availability under the revolver is subject to a borrowing base calculated based on eligible accounts receivable, eligible inventory, eligible cash and permitted investments.

Borrowings bear interest at Libor plus an applicable margin ranging from 100 basis points to 150 bps based on the average availability under the credit facility and whether the company is in compliance with a leverage ratio of 1.75 to 1.00. The applicable margin is initially 100 bps.

In addition, the company will pay a commitment fee of 30 bps initially, which steps down to 25 bps if unused commitments are less than 65% of the total commitments.

The amended credit agreement requires the company to maintain a minimum consolidated fixed-charge coverage ratio of 1 to 1, which is triggered anytime adjusted availability under the facility falls below the greater of $45 million or 10% of the maximum available borrowing amount for two consecutive business days.

As of May 14, the company had no outstanding revolving loans and about $51 million outstanding undrawn letters of credit under the facility.

The independent oil and natural gas exploration and production company is based in Denver.

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