Steel Dynamics has replaced its term debt with a new four-year, $230 million revolver. The previous credit started out as a $75 million revolver, and also had "A" and "B" loan components. "We were at the stage in our maturity as a company where we now had greater cash flows than a few years ago when we put that facility in place," said Tracy Shellabarger, Steel Dynamics' v.p. finance and cfo. "We needed the ability to get in and out a little quicker than the term loans allowed us to." At the time of the refinancing the company had $108 million outstanding on the "B" loan.
In addition to the flexibility of the revolver, the company also benefited from market conditions. "The market is a little better now than March '02 when the deal was put in place," Shellabarger said. As a result Steel Dynamics scored slightly better pricing and covenant structures, he added. The revolver is priced on a grid tied to leverage and the spread ranges from LIBOR plus 3/4-2%.
Morgan Stanley is the lead arranger on the credit and the previous lead as well. "We look for someone who understands our business, a willingness to think creatively and obviously the ability to get the deal done," Shellabarger said. "In keeping with that--good advice, good counsel, good representation of what's market. We think we find all of those things with Morgan Stanley." GE Capital is administrative agent. Harris Bank and National City Bank hold other agent roles.