Olympic Steel closed a new $132 million credit that locks in lower rates than those on its previous $125 million line. "At the time we did the last one, [the steel market] was terrible," said Richard Marabito, cfo and treasurer, explaining the rough market conditions for the industry when the previous three-year agreement was signed in June 2001. He explained that the new three-year deal lowered the borrowing rate by about 175 basis points.
Olympic Steel also switched its lead agent bank to Comerica Bank, jumping from National City. "Comerica came with a very attractive proposal," Marabito stated, declining to elaborate on the change from National City. He added that Olympic Steel has done business with Comerica for the past eight years. Standard Federal Bank, a unit of ABN AMRO, and Fifth Third Bancorp also participated in the facility, Marabito said. A National City spokeswoman declined to comment on account of client confidentiality, while a Comerica official did not return calls.
The new credit comprises a $90 million revolver and $42 million in fixed asset term loans, Marabito stated. It is secured by Olympic Steel's accounts receivable, inventory and substantially all property and machinery. He further noted that $30 million of the term loan portion is secured by the steel service center's land and buildings, while $12 million is specifically secured by machinery. He would not divulge the final pricing terms. There are also two optional one-year extensions on the credit beyond the December 2005 maturity date, determined by the lenders.