ALERIS CORPORATION (NYSE:ARS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

The Company may voluntarily prepay loans outstanding under the Term Loan Facility, in whole or in part, without premium or penalty (except as described below) in minimum amounts, at any time, subject to customary “breakage” costs with respect to LIBOR rate loans. If the Company prepays loans in connection with a repricing transaction prior to the date that is twelve months after the closing of the Term Loan Facility, subject to certain exceptions, such prepayment will be subject to a 1.00% prepayment fee.

to the Term Loan Security Agreement, the Term Loan Facility is secured by (i)a first-priority lien on substantially all of the Company’s and the Guarantors’ assets (excluding the ABL Collateral (as defined below)), including, without limitation, all owned and material U.S. real property, equipment, intellectual property and stock of the Company and the Guarantors (other than Parent) and other subsidiaries (including 50% of the outstanding non-voting stock (if any) and 65% of the outstanding voting stock of certain “first tier” foreign subsidiaries and certain “first tier” foreign subsidiary holding companies), which assets secure the 2023 Notes on a second priority basis and secure the ABL Facility on a third priority basis (the “Term Loan Collateral”) and (ii)a second-priority lien on all of the Company’s and the Guarantors’ (other than Parent) inventory, accounts receivable, deposit accounts and related assets (subject to certain exceptions), which assets secure the ABL Facility on a first priority basis and secure the 2023 Notes on a third priority basis (the “ABL Collateral” and, together with the Term Loan Collateral, the “Collateral”), in each case excluding certain assets and subject to permitted liens.

The Term Loan Facility contains a number of covenants that, subject to certain exceptions, impose restrictions on the Company and certain of its subsidiaries, including, without limitation, restrictions on the ability to, among other things, incur additional debt, grant liens or security interests on assets, merge, consolidate or sell assets, make investments, loans and acquisitions, pay dividends and make restricted payments, modify terms of junior indebtedness or enter into affiliate transactions. The Term Loan Facility also contains certain customary affirmative covenants and events of default.

2023 Notes

On June25, 2018, the Company, completed the issuance of $400million aggregate principal amount of 10.750% senior secured junior priority notes due 2023 (the “2023 Notes”) and related guarantees (the “Guarantees”) in a private offering under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The Notes were issued under the 2023 Indenture. The Notes are unconditionally guaranteed by the Guarantors.

The 2023 Notes bear interest at an annual rate of 10.750%. Interest is payable on the 2023 Notes semi-annually in arrears on January15 and July15 of each year, beginning on January15, 2019. The 2023 Notes will mature on July15, 2023.

to the Notes Security Agreement, the 2023 Notes are secured by (i)a second-priority lien on the Term Loan Collateral and (ii)a third-priority lien on the ABL Collateral, in each case excluding certain assets and subject to permitted liens.

From and after July15, 2020, the Company may redeem the 2023 Notes, in whole or in part, at a redemption price of 104.000% of the principal amount of the 2023 Notes, plus accrued and unpaid interest, if any, to (but excluding) the redemption date, declining ratably to 50% of the principal amount of the 2023 Notes, plus accrued and unpaid interest, if any, to (but excluding) the redemption date, on or after July15, 2022. Prior to July15, 2020, the Company may redeem up to 40% of the aggregate principal amount of the 2023 Notes (including any additional 2023 Notes) with funds in an amount equal to all or a portion of the net cash proceeds from certain equity offerings at a redemption price of 110.750%, plus accrued and unpaid interest, if any, to (but excluding) the redemption date. The Company may make such redemption so long as, immediately after the occurrence of any such redemption, at least 60% of the aggregate principal amount of the 2023 Notes (including any additional 2023 Notes) remains outstanding and such redemption occurs within 180 days of the closing of the applicable equity offering. Additionally, at any time prior to July15, 2020, the Company may redeem the 2023 Notes, in whole or in part, at a redemption price equal to 50% of the principal amount of the 2023 Notes, plus the applicable premium as provided in the 2023 Indenture and accrued and unpaid interest, if any, to (but excluding) the redemption date.

If the Company or any restricted subsidiary consummates one or more asset sales generating net proceeds in excess of $35million in the aggregate at any time (x)on or prior to July15, 2019, the Company may, at its option, redeem all or a portion of the 2023 Notes in an aggregate principal amount not to exceed such net proceeds at a redemption price equal to 102.000% of the principal amount of the 2023 Notes and (y)after July15, 2019 but on or prior to July15, 2020, the Company may, at its option,

redeem all or a portion of the 2023 Notes in an aggregate principal amount not to exceed such net proceeds at a redemption price equal to 103.000% of the principal amount of the 2023 Notes, in each case, plus accrued and unpaid interest, if any, to (but excluding) the redemption date.

If the Company experiences a “change of control” as specified in the 2023 Indenture (x)on or prior to July15, 2019, the Company may, at its option, redeem all, but not less than all, of the 2023 Notes at a redemption price equal to 102.000% of the principal amount of the 2023 Notes and (y)at any time after July15, 2019 but on or prior to July15, 2020, the Company may, at its option, redeem all, but not less than all, of the 2023 Notes at a redemption price equal to 103.000% of the principal amount of the 2023 Notes, in each case, plus accrued and unpaid interest, if any, to (but excluding) the redemption date.

In addition, if the Company experiences a change of control and does not elect to redeem the notes as provided above, the Company must offer to purchase all of the 2023 Notes at a price equal to 101% of the principal amount of the 2023 Notes, plus accrued and unpaid interest, if any, to (but excluding) the date of purchase. If the Company or its restricted subsidiaries engage in certain asset sales, the Company will be required to use 80% of the consideration received from such asset sales to permanently reduce certain debt within a specified period of time. The Company will be required to use a portion of the remaining proceeds of such asset sales, as well as the proceeds of certain events of loss with respect to the Collateral, as the case may be, to make an offer to purchase a principal amount of the 2023 Notes at a price of 50% of the principal amount of the 2023 Notes, plus accrued and unpaid interest, if any, to (but excluding) the date of purchase, to the extent such proceeds are not invested or used to permanently reduce certain debt within a specified period of time.

Subject to certain limitations and exceptions, the 2023 Indenture contains covenants limiting the ability of the Company and its restricted subsidiaries to, among other things: incur additional debt; pay dividends or distributions on the Company’s capital stock or redeem, repurchase or retire the Company’s capital stock or subordinated debt; issue preferred stock of restricted subsidiaries; make certain investments; create liens on the Company’s or its Subsidiary Guarantors’ assets to secure debt; enter into sale and leaseback transactions; create restrictions on the payment of dividends or other amounts to the Company from the Company’s restricted subsidiaries that are not guarantors of the 2023 Notes; enter into transactions with affiliates; merge or consolidate with another company; and sell assets, including capital stock of the Company’s subsidiaries. The 2023 Indenture also contains customary events of default.

ABL Amendment

On June25, 2018, the Company entered into the ABL Amendment, which amended the credit agreement governing its existing asset-based revolving credit facility, dated as of June15, 2015 (as amended by Amendment No.1 thereto dated as of March18, 2016, Amendment No.2 thereto dated as of February8, 2017 and Amendment No.3 thereto dated as of December22, 2017, the “ABL Facility”), among the Company, the other borrowers party thereto, the lenders party thereto, the ABL Administrative Agent and the European Agent.

The terms of the ABL Amendment provide for a $150.0million increase to the size of the ABL Facility, thereby increasing the size of the ABL Facility from up to $600.0million to up to $750.0million, subject to applicable borrowing bases. The ABL Facility, as amended by the ABL Amendment, also provides for an accordion to which the available commitments thereunder may be further increased by up to an additional $350.0million, subject to applicable borrowing bases.

In addition to increasing the size of the ABL Facility, the terms of the ABL Amendment, among other things, (i)extended the maturity date of the ABL Facility from June15, 2020 to the earliest of (x)June25, 2023, (y) the date that is 60 days prior to the scheduled maturity date of the term loans under the Term Loan Facility (currently February28, 2023) and (z)the date that is 60 days prior to the scheduled maturity date of the 2023 Notes (currently July15, 2023), (ii) removed a previous borrowing base reserve on Belgian finished goods inventory, (iii)permitted the incurrence of the Term Loan Facility and the 2023 Notes and (iv)amended certain covenants and other provisions consistent with the corresponding terms of the Term Loan Facility and the 2023 Notes.

Concurrently with the effectiveness of the ABL Amendment, the Company amended and restated the U.S. pledge and security agreement, dated June15, 2015 (the “Existing ABL Security Agreement”), among the Company, the other borrowers party thereto, the other loan parties party thereto and the ABL Administrative Agent, securing its and its domestic subsidiaries obligations in respect of the ABL Facility and certain other secured obligations referenced therein (the “ABL Obligations”). to the Amended and Restated ABL Security Agreement, the ABL Obligations continue to be secured by a first-priority lien over the ABL Collateral. As a result of the Amended and Restated ABL Security Agreement, the ABL Obligations are also secured by a third-priority lien (ranking junior to the lien therein in favor of the Term Loan Facility and the 2023 Notes) over the Term Loan Collateral, in each case excluding certain assets and subject to permitted liens.

General

From time to time, in the ordinary course of their business, certain lenders and the administrative agents under the Term Loan Facility and the ABL Facility or their affiliates have provided, and may in the future provide, financial advisory and

investment banking services to the Company and its affiliates, for which they have received and may continue to receive customary fees and commissions. In addition, U.S. Bank National Association or any of its affiliates, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an affiliate of the Company, and may otherwise deal with the Company or an affiliate of the Company, as if it were not the Trustee or the Collateral Agent.

The foregoing descriptions of the Term Loan Facility, the Term Loan Security Agreement, the 2023 Indenture, the 2023 Notes, the Notes Security Agreement, the ABL Amendment and the Amended and Restated ABL Security Agreement do not purport to be complete and are subject to, and qualified in their entirety by reference to, the Term Loan Facility, the Term Loan Security Agreement, the 2023 Indenture, the 2023 Notes, the Notes Security Agreement, the ABL Amendment and the Amended and Restated ABL Security Agreement, which are filed as Exhibits 10.2, 10.3, 4.1, 4.2, 10.1, 10.4 and 10.5, respectively, to this Current Report and are hereby incorporated by reference herein.

Item 1.01. Termination of a Material Definitive Agreement.

As previously disclosed in a Current Report dated May22, 2018, the Company delivered notices for the conditional redemption of all of its then outstanding (i) 7.875% senior notes due 2020 (the “2020 Notes”) to the indenture, dated as of October23, 2012 (the “2020 Indenture”), among the Company, the guarantors party thereto from time to time and U.S. Bank National Association, as trustee, and (ii) 9.500% senior secured notes due 2021 (the “2021 Notes” and, together with the 2020 Notes, the “Existing Senior Notes”) to the indenture, dated as of April4, 2016 (the “2021 Indenture” and together with the 2020 Indenture, the “Existing Senior Notes Indentures”), among the Company, the guarantors party thereto from time to time and U.S. Bank National Association, as trustee and as collateral agent.

As a result of completing the debt refinancing transactions, the redemption conditions set forth in the notices were satisfied and, on June25, 2018, the Company deposited sufficient funds with the trustees for the Existing Senior Notes to redeem the Existing Senior Notes and instructed such trustees to apply the deposited funds to redeem in full the aggregate principal amount of the Existing Senior Notes outstanding on June25, 2018. As a result, the Existing Senior Notes have been redeemed, the Existing Senior Notes Indentures have been satisfied and discharged in accordance with their terms and the security agreement, dated April4, 2016, among the Company, the guarantors party thereto from time to time and U.S. Bank National Association, as collateral agent, has been terminated in accordance with its terms. Notwithstanding the foregoing, certain customary provisions of the Existing Senior Notes Indentures, including those relating to the compensation and indemnification of the trustee, will survive. The 2020 Notes were redeemed at a redemption price equal to 101.969% of the principal amount thereof, plus accrued and unpaid interest to June25, 2018, and the 2021 Notes were redeemed at a redemption price equal to 104.750% of the principal amount thereof, plus accrued and unpaid interest to June25, 2018.

Item 1.01. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosures set forth above under Item 1.01 of this Current Report are also responsive to Item 1.01 of this Current Report and are hereby incorporated by reference into this Item 1.01.

Item 1.01. Financial Statements and Exhibits.

(d) Exhibits.

Aleris Corp Exhibit
EX-4.1 2 d551839dex41.htm EX-4.1 EX-4.1 Exhibit 4.1 Execution Version       ALERIS INTERNATIONAL,…
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