Rayonier details facility amendment that provides for covenant relief

By Sarah Lizee

Olympia, Wash., Oct. 2 – Rayonier Advanced Materials Inc. detailed the amendment made to its credit agreement on Friday under which lenders under its senior secured credit agreement agreed to relax the total net senior first-lien secured leverage ratio and the interest coverage ratio tests through 2021, according to an 8-K filing with the Securities and Exchange Commission.

Financial covenants were amended to permit the company to maintain a first-lien secured net leverage ratio of up to a ratio that varies by fiscal quarter, ranging between 5.6 to 1 and 4.95 to 1 in 2019, 5.4 to 1 and 4.5 to 1 in 2020, 4.4 to 1 and 3.55 to 1 in 2021, and 3.0 to 1 thereafter.

The company is also now required to maintain an interest coverage ratio of as low as a ratio that varies by fiscal quarter, ranging between 1.65 to 1 and 2.35 to 1 in 2019, 1.75 to 1 and 2 to 1 in 2020, 2.2 to 1 and 2.55 to 1 in 2021 and 3 to 1 thereafter.

Rayonier may use at any time up to $120 million or $130 million (depending on the fiscal quarter) of the commitments under the revolving facilities.

The amendment also reduced the aggregate principal amount of dollar-denominated revolving commitments to $84 million from $100 million and reduced the aggregate principal amount of multicurrency revolving commitments to $126 million from $150 million.

The company is now required, following the consummation of the previously announced sale of the thermo-mechanical high-yield pulp mill located in Matane, Quebec, together with related assets, to apply a portion of the proceeds to ratably prepay the senior secured term facilities outstanding under the amended credit agreement.

In addition, the amendment provides that the loans under the credit facilities will be guaranteed by the company and its subsidiaries, subject to some exceptions.

Loans bear interest at Libor plus 300 basis points to 400 bps, based on consolidated total net leverage.

The amended credit agreement also includes customary Libor replacement provisions.

In connection with the amendment, the company paid consent fees to its lenders in an amount equal to 0.25% of the aggregate principal amount of term loans and revolving commitments outstanding.

Bank of America, NA is the administrative agent and collateral agent.

Rayonier makes cellulose-based technologies and is based in Jacksonville, Fla.

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