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PNC Bank Agents $100MM ABL Revolver for Globe Specialty Metals

October 14, 2019, 08:00 AM
Filed Under: Industry News
Related: PNC Bank

Ferroglobe PLC announced the closing of a new, five-year $100 million North American asset-based revolving credit facility, between Globe Specialty Metals, Inc. (“Globe”) and QSIP Canada ULC, each a subsidiary of the Company, as borrowers and PNC Bank, National Association, as lender and agent.

The ABL Revolver replaces the Company’s revolving credit facility (the “RCF”). At closing, the initial drawing under the ABL Revolver together with cash from Ferroglobe’s balance sheet will be used to discharge in full the Company’s obligations under the RCF, repurchase certain accounts receivable from the Company’s accounts receivable securitization program and pay associated fees and expenses. Going forward, drawings under the ABL Revolver will be used to fund working capital needs of Globe and its subsidiaries and for general corporate purposes.

At the current drawn amount, the ABL Revolver bears interest of L+3%, versus L+3.5% in the RCF. It also has a minimum liquidity requirement of $32.5 million (including $10 million of undrawn availability under the ABL), compared to a $150 million pledged cash requirement under the RCF prior to September 30, 2019. The maximum amount available under the ABL Revolver is subject to a borrowing base comprising North American inventory and accounts receivable of Globe and certain of its subsidiaries.  Finally, it contains no leverage-based or financial ratio-based covenants.

Pedro Larrea, Ferroglobe’s Chief Executive Officer commented, “After receiving a number of competitive committed offers, we elected to proceed with the ABL Revolver provided by PNC, as it best met our refinancing objectives. We want to thank PNC for their continuous support to Ferroglobe; for their flexibility in adapting the structure of the transaction to our improved balance sheet after the divestiture of FerroAtlántica on August 30, 2019 and for their dedication to closing a complex transaction in just a few weeks.”

Mr. Larrea added, “The replacement of the RCF marks another important step in our overall strategy to de-risk our balance sheet.  The new ABL Revolver has no leverage-based or financial ratio-based covenants and reduced liquidity requirements as compared to the RCF, thereby enhancing our flexibility.  It is one element of the refinancing strategy previously announced and has been structured to complement the additional financing we are now focusing on, further bolstering our capital structure.  We are also executing an aggressive cash generation plan for the coming quarters which envisages significant working capital release. We will update the market on this plan in due course.”

The credit agreement governing the ABL Revolver (the “Credit Agreement”) contains customary covenants, representations and warranties and events of default for financings of this type. The subsidiaries of the Company other than Globe and its subsidiaries will not be restricted under the negative covenants in the Credit Agreement.

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