Scrap metal recycler Metal Management put a new credit facility in place after LaSalle Bank approached the company with an offer it could not refuse. The new four-year, $200 million revolver is priced at LIBOR plus 1 1/4%, while the prior credit carried a spread of LIBOR plus 2 1/2%. "We found the terms to be significantly more attractive than the deal we had previously," noted Robert Larry, Metal Management's cfo. "We decided to do this because our business has expanded and our business supports additional borrowing capacity." Proceeds will be used for working capital and to pay down Metal Management's previous $110 million revolver and $18 million term loan.
Deutsche Bank led the previous facility and did not participate this time around. "The group that we were financed by at Deutsche Bank was part of asset-based financing, generally seeking higher risk and higher rewards," Larry said. "Our company is lower risk and the LaSalle deal involved 100-125 basis points of lower borrowing costs." The new spread is tied to a grid based on leverage. LaSalle was a syndicate member on the old credit. "We've had operating cash management services with LaSalle since 1997," Larry added.