AK STEEL HOLDING CORPORATION (NYSE:AKS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into Material Definitive Agreement.
On September 13, 2017, AK Steel Corporation (the “Company”) entered into an amended and restated $1.35 billion, five-year senior secured revolving credit facility (the “Amended and Restated Credit Facility”), which includes a $1.285 billion asset-based revolving facility and a $65.0 million “first-in, last-out” asset-based facility (the “FILO Facility”). The Amended and Restated Credit Facility, which matures on September 13, 2022, is governed by a Second Amended and Restated Loan and Security Agreement with Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A. and Wells Fargo Capital Finance, LLC, as Co-Syndication Agents, Deutsche Bank Securities Inc. and Fifth Third Bank as Co-Documentation Agents, Bank of America, N.A., JPMorgan Chase Bank, N.A. and Wells Fargo Capital Finance, LLC, as Joint Lead Arrangers and Co-Book Managers, and certain financial institutions, as lenders (the “Loan and Security Agreement”).The Amended and Restated Credit Facility includes a $100.0 million swingline sublimit and a $300.0 million letter of credit sublimit. The Loan and Security Agreement also provides that, under certain circumstances, at the Company’s request, the Amended and Restated Credit Facility’s revolving credit line may be increased by up to $400.0 million, up to $100 million of which may be incurred under a foreign incremental revolving credit facility by subsidiaries of the Borrower organized under the laws of Canada, England and Wales, the Netherlands or Germany.The Company will use borrowings under the Amended and Restated Credit Facility for working capital and general corporate purposes. All loans outstanding under the Company’s existing credit facility, governed by an Amended and Restated Loan and Security Agreement, dated as of March 17, 2014, by and among the Company, certain subsidiaries of the Company, the lenders party thereto, and Bank of America, N.A., as Agent, immediately prior to the closing of the Amended and Restated Credit Facility were converted into loans under the Amended and Restated Credit Facility.
The Company’s obligations under the Amended and Restated Credit Facility are secured by the inventory and accounts receivable of the Company and certain of its subsidiaries and are guaranteed by its parent company, AK Steel Holding Corporation (“AK Holding”) and certain of its subsidiaries.Availability of borrowings under the Amended and Restated Credit Facility from time to time is subject to a borrowing base calculation based upon a valuation of the Company’s eligible inventories (including raw materials, finished and semi-finished goods, work-in-process inventory, and in-transit inventory) and eligible accounts receivable, each multiplied by an applicable advance rate (with the FILO Facility utilizing a higher advance rate, which provides a higher level of availability).In addition, availability of borrowings is reduced in an amount equal to the Company’s outstanding letters of credit.Borrowings under the Amended and Restated Credit Facility will bear interest at a base rate or, at the Company’s option, LIBOR, plus an additional interest rate margin that is determined by the average daily availability of borrowings under the Amended and Restated Credit Facility.The additional interest rate margin for revolver borrowings (i.e., non-FILO Facility borrowings) ranges from 0.25% to 0.50% per annum in the case of base rate borrowings and from 1.25% to 1.50% per annum in the case of LIBOR borrowings. For borrowings under the FILO Facility, the additional interest rate margin ranges from 1.25% to 1.50% per annum in the case of base rate borrowings and from 2.25% to 2.50% per annum in the case of LIBOR borrowings.In addition, the Company will pay a commitment fee on the undrawn commitments under the Amended and Restated Credit Facility from time to time according to the average daily balance of borrowings (which balance also will include outstanding letters of credit) under the Amended and Restated Credit Facility during any month.This commitment fee on undrawn commitments applies at a rate ranging from of 0.25% to 0.35%perannum. The Loan and Security Agreement contains representations and warranties, affirmative and negative covenants, and events of default (applicable to the Company, AK Holding and certain of its subsidiaries) that are customary for credit agreements of this type.
The foregoing description does not constitute a complete summary of the Amended and Restated Credit Facility and is qualified by reference in its entirety to the full text of the Loan and Security Agreement, a copy of which will be filed as an exhibit to the Company’s next Quarterly Report on Form 10-Q.
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Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosures required by this Item 2.03 are contained in Item 1.01 above and are incorporated as if fully restated herein.
About AK STEEL HOLDING CORPORATION (NYSE:AKS)
AK Steel Holding Corporation is an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products through its subsidiary, AK Steel Corporation (AK Steel). The Company operates approximately eight steelmaking and finishing plants, over two coke plants and approximately two tube manufacturing plants across states, which include Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia. These operations produce flat-rolled carbon, specialty stainless and electrical steels that it sells in sheet and strip form, and carbon and stainless steel that it finishes into welded steel tubing. The Company also produces metallurgical coal through its subsidiary, AK Coal Resources, Inc. (AK Coal). In addition, the Company operates trading companies in Mexico and Europe that buy and sell steel and steel products and other materials. It sells flat-rolled carbon steel products, consisting of coated, cold-rolled, and hot-rolled carbon steel products.