Stelco Completes Refinancing of US$270 Million Term Loan
05/10/2007 - Stelco has completed a US$270 million funded term loan refinancing with GE Corporate Lending Canada that refinances the comapny's Cdn$375 million revolving term loan with a more traditional facility that has significantly lower interest rates and fees.
Stelco Inc. has completed a US$270 million (Cdn$297 million at closing) funded term loan refinancing with GE Corporate Lending Canada, which was arranged by GE Capital Markets, Inc. By completing this refinancing prior to May 11, 2007, Stelco did not have to pay the $11.25-million annual fee otherwise payable under the refinanced facility.
The new facility refinances Stelco's Cdn$375 million revolving term loan with a more traditional facility that has significantly lower interest rates and fees. Significant market interest for the term loan allowed Stelco to increase the amount of the facility to US$270 million vs. the previously announced US dollar equivalent of Cdn$275 million.
"We are very pleased with the confidence that our lenders have shown in Stelco. The completion of the second phase of our debt refinancing positions us well for the future and we will continue to pursue opportunities to enhance our capital structure," said Rodney Mott, President and CEO.
The new facility has a six-year term and bears interest at a floating rate equal to a US base rate + 1 % or LIBOR + 3.5%, depending on the nature of the loan instrument incurred. The new term loan is secured by a first-priority interest in Stelco’s fixed assets of and a second-priority interest on the working capital assets. The term loan includes typical covenants, as well as a financial covenant based on achieving a minimum EBITDA threshold for Stelco's Lake Erie Steel business.
Subject to certain conditions, the new term loan is prepayable, in part or in whole, at any time without penalty. Stelco paid an underwriting fee in connection with the refinancing.
Stelco, one of Canada's largest steel companies, is focused on its two Ontario-based integrated steel businesses located in Hamilton and in Nanticoke. These operations produce high quality value-added hot rolled, cold rolled, coated sheet and bar products.
