American Metal Market (AMM): Castle Executes Credit Facility Commitments
As originally appeared in American Metal Market (AMM) on June 6, 2017
June 6, 2017 | 12:07 PM
By Grace Lavigne
NEW YORK — A.M. Castle & Co. has executed commitment letters for a $125-million post-restructuring credit facility and an $85-million debtor-in-possession credit facility, to support its operations and growth during and after its restructuring.
The closing of the facilities with PNC Bank, National Association—a subsidiary of PNC Financial Services Group Inc.—are subject to the conditions set forth in the letters, including, without limitation, definitive documentation and bankruptcy court approval, according to Castle. The post-restructuring credit facility is expected to close when Castle completes its restructuring later this summer and will be used, in part, to repay certain existing debt, the company said.
“We believe that reaching these agreements with PNC, an established lender to the metals industry, will be extremely advantageous to Castle as we complete our financial restructuring, allowing us to emerge a financially stronger company,” Castle executive vice president and chief financial officer Patrick Anderson said in a statement on June 5.
“PNC’s commitment to providing working capital at competitive rates will significantly reduce our cost of capital, resulting in substantial cash interest savings of at least 70 percent from our current annualized rate of approximately $36 million, which will help us deliver on our promise of growing our partnerships with our vendors and improving our service to our customers,” he said.
“We are very pleased that the path we laid out on April 7 continues to progress as we envisioned,” Castle president and chief executive officer Steve Scheinkman said. “These agreements with PNC are another step in delivering what we promised to all our stakeholders regarding the restructuring, and we look forward to announcing our next steps in the coming weeks and completing the restructuring this summer, as we originally planned.”
In April, the Oak Brook, Ill.-based special metal distributor reached an agreement with the majority of its lenders to restructure its debt in order to reduce its “significant” interest burden and drive profitability and growth. Last month, the company narrowed its net loss despite a drop in revenue.