Steel Technologies was able to increase its revolver capacity from $125 million to $151 million due to its solid bank relationships and past ability to pay down debt despite the economic climate, said Joseph Bellino, cfo and treasurer. Bellino said the flat rolled steel producer has managed to keep its leverage relatively low--last reported at 2.35 times-- despite expanding the unsecured facility. "We are able to pay down debt even in a weak economic cycle," he added, noting that the company had previously paid down around $27 million of drawn bank debt on its revolver.
Currently, there is about $110 million tapped on the facility, with the extra capacity in place to fund the company's plans to expand its fixed asset base and existing plant capabilities and to fund accounts receivables and inventory. The proceeds are also in place to support $6 million principal yearly amortization payments remaining on a 10-year private placement loan originally for $40 million, which now has a $12 million balance.
The Louisville, Ky.-based company extended the credit last December to expire in August of 2005 instead of 2004, Bellino noted. PNC Bank leads the deal. Bank One, SunTrust Bank, National City Bank and U.S. Bank are also involved. "[PNC has] dedicated loan officers who specialize in the metals industry," Bellino said, speaking to the benefits of having PNC as the lead arranger. "Our banking needs are dynamic rather than static," he said, explaining that the company is always in close contact with its banks. The credit is based on a grid tied to leverage with interest rates ranging between 3.43-4.75%, Bellino said. The company's total debt is currently $122 million.