Steel Technologies has ironed out a $135 million unsecured revolver that will fund strategic growth plans in North America. These include "selective acquisitions and potential green field expansions," said Joseph Bellino cfo of the Louisville, Ky.-based flat-rolled steel processor. "We have a platform of 21 facilities in the U.S. and Mexico and part of our capital needs and growth plans is to leverage that North American platform, expanding our market in this area and potentially new areas."
The five-year revolver is initially smaller than the previous $151 million line, but has an accordion feature so it can be increased to $200 million. The $135 million will provide the company with ample credit availability in the short-term, Bellino said, adding that Steel Technologies would not have to pay for the difference in commitment fees. The steel processor also has at its disposal $47.3 million from a secondary stock offering the company put in place six months ago.
The previous revolver was set to mature next year and was capped at $151 million. "With the credit risk environment improving and credit risk spreads slightly decreasing, Steel Technologies thought it was an optimal time to line up longer term funds," Bellino said. The company gained more flexibility by adding a new category to the pricing matrix, located at the lower end of the leverage spectrum. This will be an incentive for Steel Technologies to lower pricing based on the company's performance and leverage, he said. Bellino declined to provide exact pricing, but said it has improved on the last facility.
PNC Bank acted as lead bank in both the existing and previous facility and has been Steel Technologies' lead bank for at least 10 years. The bank group remained practically unchanged, Bellino said. SunTrust Bank, Bank One, National City Bank of Kentucky and U.S. Bank were lenders in both the new and the old revolver. Fifth Third Bank was added to the syndicate. Bellino said the syndication process stemmed from continuing dialogue and a mutually successful relationship with its lead bank and lenders.