Metal processing company Gibraltar Steel Corp. recently exercised a $50 million expansion feature and received an additional $15 million on its credit in order to help back two recent acquisitions. The company has made 18 strategic acquisitions since 1995 and has used financing besides bank debt to finance the purchases only on three occasions, said Kenneth Houseknecht, director of investor relations.
The original five-year revolver for $225 million--put in place in June 2002--is now for $290 million. "We didn't have a line greater than what we needed immediately," Houseknecht said, explaining why the line was initially less 10 months ago. Proceeds from the facility went toward the acquisition of building and construction product maker Construction Metals in April and ventilation product manufacturer Air Vent this month. Houseknecht would not discuss specific terms of the transactions.
J.P. Morgan leads the credit for the Buffalo, N.Y.-based company, Houseknecht said, adding that J.P. Morgan and most of its other lenders have long standing relationships with Gibraltar. FleetBoston Financial, Key Bank and HSBC Bank USA are other lenders in the 10 bank syndicate. The revolver is also in place for working capital, general corporate purposes and internal growth initiatives, beyond its purpose to help fund acquisitions. Pricing on the credit is LIBOR plus 13/4%. But as of last December, Gibraltar had $50 million of the tapped facility's pricing converted to fixed rates ranging from 7.22-7.93% through interest rate swaps that expire starting in 2004. The company's total long-term debt as of last March is about $182 million. Houseknecht added that Gibraltar is always looking for more acquisition opportunities. "We are a very active acquirer," he said.