New Enterprise Stone & Lime Co., Inc. entered into a new $450 million secured term loan facility (“New Term Loan”) with a group of private lenders. The New Term Loan will be used to repay in full its existing 13% Secured Notes and $70 million term loan. In connection with the incurrence of the New Term Loan and the repayment of related existing debt, the Company has entered into an amendment and restatement (“ABL Amendment”) of the terms of its existing $105 million asset-based revolving credit facility (“ABL Facility”). PNC is the administrative agent for the asset-based credit facility according to an SEC 8-K filing.
The new term loan has a stated maturity of five years, providing stability to the company’s capital structure and is priced at LIBOR plus 8.0% (with a 1.0% LIBOR floor). This pricing will result in a significant reduction in annual interest expense.
Additionally, the ABL Amendment decreases the interest rate margin on the revolving loans under the ABL Facility by 1.25%. The ABL Amendment also removes certain restrictive financial covenants, including a $20 million availability block, and reduces certain operational and financial reporting requirements. While the total ABL Facility remains at $105 million, the ABL Amendment allows for the issuance of an additional $15 million of letters of credit.
Furthermore, both the New Term Loan and the ABL Amendment provide increased flexibility in refinancing the company’s remaining debt.
The company’s President and Chief Executive Officer, Paul Detwiler III, commented on the New Term Loan and ABL Amendment, saying, “We believe our ability to complete this financing in a difficult capital markets environment demonstrates investors’ recognition of the steady improvement in our financial performance and expectations for continued progress. The refinancing is an important step in enhancing our capital structure by extending maturity and lowering cost.”
The credit agreements and documents related to the New Term Loan and the ABL Amendment have been included as exhibits to a Form 8-K that the Company filed with the Securities and Exchange Commission today.
New Enterprise Stone & Lime Co., Inc. is a leading, privately-held, vertically-integrated construction materials supplier and heavy/highway construction contractor in Pennsylvania and western New York and a national traffic safety services and equipment provider. Our core businesses include: (i) construction materials (ii) heavy/highway construction and (iii) traffic safety services and equipment.