AK Steel has entered into a new $300 million revolver backed by trade receivables to benefit from borrowing flexibility and to replace a facility expiring in September. The new loan is led by GE Capital. "We like the flexibility that comes from having an accounts receivable-based facility from a cost and convenience point of view," said Albert Ferrara, cfo and v.p. of finance.
The new revolver gives AK Steel the advantage of accessing an inexpensive source of financing and the availability of drawing against short notice, according to Ferrara. The loan also includes an option of two one-year renewals and can support up to $200 million in letters of credit issuance. The stainless steel producer also has a $400 million, five-year revolver, secured by inventory. Ferrara declined to comment on the pricing of both old and new facilities.
Pittsburgh National Bank was the lead bank in the old financing. "GE made a very competitive proposal," Ferrara said. He added that Pittsburgh National is participating in the new facility, but he declined to comment on whether or not Pittsburgh National participated in the bidding process.
Last month, AK Steel redeemed the remaining $62.5 million of its $250 million senior secured notes due December 2004.