Allegheny Technologies Incorporated has closed on the previously announced asset-based lending revolving credit facility that replaces its $400 million revolving credit facility. The five-year $400 million ABL facility is collateralized by the accounts receivable and inventory of ATI’s domestic operations.

The following is an excerpt from the 8-K filing that Allegheny Technologies filed with the SEC on Sep. 25.

Entry into a Material Definitive Agreement.

On September 23, 2015, Allegheny Technologies Incorporated (the “Company”) and certain wholly-owned domestic subsidiaries of the Company entered into a $400.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), which includes a letter of credit sub-facility of up to $200.0 million and a swingline sub-facility of up to $50.0 million, pursuant to the terms and conditions of a Revolving Credit and Security Agreement, dated as of September 15, 2015 (the “Credit Agreement”), by and among the borrowers party thereto (collectively, the “Borrowers”), the guarantors party thereto (collectively, the “Guarantors” and together with the Borrowers, the “Loan Parties”), the lenders party thereto (the “Lenders”), PNC Bank, National Association, as Agent, and PNC Capital Markets LLC, as Sole Lead Arranger and Sole Bookrunner. The terms of the Revolving Credit Facility allow the Borrowers to increase the size of the Revolving Credit Facility by up to $200.0 million in the aggregate without the consent of the Lenders, so long as no default or event of default has occurred and is continuing. The Revolving Credit Facility replaces the $400.0 million senior secured revolving credit facility originally entered into on July 31, 2007 (as amended, the “Prior Credit Facility”).

The Revolving Credit Facility matures in September 2020 and is collateralized by each Loan Party’s respective (i) accounts receivable and inventory and (ii) solely to the extent related to such accounts receivable and inventory, proceeds, supporting obligations, chattel paper, documents, electronic chattel paper, general intangibles, instruments, deposit accounts, commercial tort claims, and letter-of-credit rights. The obligations of the Borrowers under the Revolving Credit Facility have been guaranteed by the Guarantors. Availability under the Revolving Credit Facility is based upon the amount of eligible inventory and eligible accounts receivable applied against certain advance rates. The applicable interest rate for borrowings under the Revolving Credit Facility includes interest rate spreads based on available borrowing capacity that range between 1.25% and 1.75% for LIBOR-based borrowings and 0.25% and 0.75% for base rate borrowings.

The Credit Agreement contains a financial covenant whereby, at any time an event of default has occurred and is continuing or undrawn availability under the Revolving Credit Facility is less than the greater of (i) 10% of the then applicable maximum borrowing amount or (ii) $40.0 million, the Loan Parties must maintain a fixed charge coverage ratio of not less than 1.00:1.00, as calculated in accordance with the terms of the Credit Agreement. Additionally, the Borrowers must demonstrate liquidity, as calculated in accordance with the terms of the Credit Agreement, of at least $500.0 million on the date that is 91 days prior to June 1, 2019, the stated maturity date of the 9.375% Senior Notes due 2019 issued by the Company.

Compared to ATI’s previous revolving credit facility, the ABL facility contains no leverage or interest coverage ratios, and the borrowing costs are expected to be lower. There is no impact on ATI’s outstanding bonds as a result of replacing the previous facility with the ABL facility.

“The new ABL facility helps secure our solid liquidity position,” said Pat DeCourcy, Senior Vice President, Finance and CFO. “We are pleased to have received strong support on the new facility from our banking group.”

Allegheny Technologies Incorporated is one of the largest and most diversified specialty materials and components producers in the world with revenues of approximately $4.3 billion for the twelve months ended June 30, 2015.

Posted on ABL Advisor Deal Tables: PNC Agents $400MM Senior Secured Revolver for Allegheny Technologies