Kaiser Aluminum extends credit agreement to 2020, amends pricing

By Tali Rackner

Norfolk, Va., Dec. 1 – Kaiser Aluminum Corp. amended and extended its $300 million credit agreement with agent JPMorgan Chase Bank, NA to reduce pricing and increase flexibility, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The term was extended to December 2020 from September 2016. Kaiser may use up to $20 million for letters of credit.

Initial interest on the loans Libor plus 125 basis points.

The company will also pay a monthly commitment fee of 37.5 bps of the average daily unused portion of the total revolving commitment, which will accrue at a rate equal to 25 bps per year if the average daily unused portion of the total revolving commitment is less than 33.3% of the total revolving commitment.

Kaiser may borrow a total amount equal to the lesser of $300 million and a borrowing base comprising (a) 85% of eligible accounts receivable; (b) the lesser of (i) 75% of eligible inventory, valued at the lower of cost or market value, and (ii) the product of 85% multiplied by the net orderly liquidation value percentage identified in the most recent inventory appraisal ordered by the administrative agent, multiplied by eligible inventory, valued at the lower of cost or market value; and (c) certain eligible machinery and equipment; (d) less certain reserves.

The revolving credit facility may be increased to up to $400 million, subject to conditions and the agreement of lenders.

As of Tuesday, borrowing availability, net of outstanding letters of credit, was roughly $284 million based upon a borrowing base of eligible accounts receivable and inventory and certain machinery and equipment. There are no outstanding borrowings.

J.P. Morgan Securities LLC and Wells Fargo Bank, NA are joint lead arrangers and bookrunners. Wells Fargo is the documentation agent, and Bank of America, NA is the syndication agent.

Kaiser Aluminum is a Foothill Ranch, Calif.-based producer of semi-fabricated specialty aluminum products.

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