Fairmount Santrol, a provider of high-performance sand and sand-based product solutions, announced it entered into a new Term Loan B credit facility to refinance its existing Term Loan B credit facilities and also secured a new revolving credit facility resulting in extended maturities.  As part of the refinancing, the company used cash on hand to continue to reduce its overall debt.  The new Term Loan B credit facility retains the minimal covenant features of the Company’s previous loans.

As of September 30, 2017, the company’s outstanding Term B-2 Loans and Extended Term B-1 Loans balance was $781.4 million, which is net of $1.3 million from the original issue discount.  The company entered into an agreement for a new $700 million, 5-year Senior Secured Term Loan B and a new $125 million, 5-year asset-based revolving credit facility to refinance the majority of its existing Term B-2 Loans and Extended Term B-1 Loans.  The remaining $82.7 million in Term B-2 Loans and Extended Term B-1 Loans were paid off by using $32.7 million of cash on hand and $50 million that the company borrowed upon closing the new ABL Revolver.  The Company also expects to incur approximately $8 million for cash fees and other costs associated with the refinancing in the fourth quarter 2017.  In addition, the Company expects to book a non-cash write-off of part or all of the deferred financing fees associated with the prior term loans and revolving credit facility in the fourth quarter 2017.  Pro forma total debt following the refinancing is expected to be $752.9 million versus $794.5 million as of September 30, 2017.

The new Term Loan B will mature in the fourth quarter of 2022 and will bear interest at an annual rate of LIBOR plus 6.0% with a LIBOR floor of 1.0%.  The Term Loan B has annual principal amortization payments of 2.5%, or $17.5 million, for the first half of the term and 5%, or $35 million, for the second half of the term, to be paid in quarterly installments with the balance payable at the maturity date.  The new Term Loan B credit facility does not have any financial maintenance covenants and has an option to increase the facility by $50 million.

The new ABL Revolver, which expires in the fourth quarter of 2022, has a borrowing capacity of up to $125 million, based on a percentage of eligible accounts receivable and inventory balances, with an option to increase the facility by $50 million.  The ABL Revolver is secured primarily by accounts receivable and inventory, and the Term Loan B primarily by the remaining assets.  The ABL Revolver will initially bear interest at an annual rate of LIBOR plus 1.75%, with the borrowed balance payable at the maturity date.  This rate will adjust based on availability under the facility with an upper limit of LIBOR plus 2.0%.  The ABL Revolver replaces the Company's existing $100 million revolving credit facility, and is expected to provide more liquidity for the Company.

Barclays acted as the Lead Arranger, Sole Bookrunner and Administrative Agent on the Term Loan B refinancing transaction.  PNC Capital Markets LLC was the Lead Arranger, Sole Bookrunner and Administrative Agent for the ABL Revolver.

Michael Biehl, Executive Vice President and Chief Financial Officer, commented, “We are pleased to have completed this refinancing prior to the end of 2017, meeting our previously stated goal.  This successful debt refinancing is the next phase in our measured approach to improve Fairmount Santrol’s capital structure and reduce the Company’s total debt levels.”