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Gerdau Ameristeel Announces $610 Million Refinancing
11/30/2009 - Gerdau Ameristeel enters into a loan agreement to borrow $610 million on arm's length terms from Gerdau Holdings, a subsidiary of Gerdau S.A.
Gerdau Ameristeel Corp. announced that it has entered into a loan agreement pursuant to which a wholly-owned subsidiary will borrow $610 million on arm's length terms from Gerdau Holdings Inc., a subsidiary of Gerdau S.A.
The loan, which is expected to be funded on December 3, 2009, will be a senior, unsecured obligation of the obligors, will bear interest at 7.95% per annum, has no scheduled principal payments prior to maturity, and will mature in full on January 20, 2020. Interest will be payable semiannually, starting on July 20, 2010.
The amount borrowed represents approximately 50% of the proceeds of the $1.25 billion of bonds issued by Gerdau Holdings Inc. on November 18, 2009.
The company said it intends to use the net proceeds of the loan to prepay $510 million of its outstanding Tranche A term debt and $100 million of its outstanding Tranche C term debt. The company has notified the holders of the term debt of its intent to prepay these amounts.
Gerdau Ameristeel, the second-largest minimill steel producer in North America, has annual manufacturing capacity of approximately 12 million tons of mill-finished steel products. Through its vertically integrated network of minimills, scrap recycling facilities, and downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada for use in a variety of industries. Gerdau Ameristeel's majority shareholder is the Gerdau Group, a 100+ year old steel company, the leading company in the production of long steel in the Americas and one of the major specialty long steel suppliers in the world.
