Stelco, a Canadian diversified steel producer, increased and extended its operating credit facility to secure more liquidity through November 2005. "We asked for a reevaluation [and] we were able to get more liquidity," said Mark Steinman, executive v.p. and cfo. "At this juncture, liquidity is important. People are questioning [whether] we like other steel companies are going to file." The company has said it would rather avoid that avenue and is currently taking proactive steps to right itself. One of those steps is the renewal of the facility, which permits drawings up to $350 million versus $295 million under the previous credit line.
Steinman declined to comment on the exact pricing on the new line. "We wouldn't have done the deal if we didn't think that it was cost effective," he said, noting there were a lot of "puts and takes" to the credit's pricing. The new deal also provides an extension of the loan, which was set to mature in September 2004. The line will now mature in November 2005. The credit was originally completed as a $250 million line, but Stelco has since increased the deal after it requested reviews intended to maximize the facility.
The syndicate is led by CIT Business Credit Canada with General Electric Capital Canada and Fleet Capital Canada Corp. rounding out the group. CIT and GE have been long time lenders to the company, with CIT signing on since the company first completed this type of asset-based facility, explained Steinman. The company brought on Fleet to spread out the exposure to the loan. "Fleet knows steel very well," said Steinman, adding that the lender has "positioned itself very well in tough financial situations."