Lufkin ups revolver to $175 million, taps $350 million term loan

By Susanna Moon

Chicago, Dec. 6 - Lufkin Industries Inc. amended its revolving credit facility last Wednesday, extending the length of the agreement to Nov. 30, 2016 and boosting the revolver size to $175 million, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

The new terms also provide for a $350 million term loan and an optional $50 million increase for a total revolving commitment of $225 million.

Interest will accrue at Libor plus 200 basis points to 325 bps, based on leverage.

JPMorgan Chase Bank, NA is the administrative agent.

The subfacility for swingline loans is $5 million on customary terms and conditions, and increases the amount available for letters of credit to $30 million.

Under the agreement, the company must maintain a leverage ratio of no more than 3 times, falling to 2 times over time, and a fixed charge coverage ratio of at least 1.5 times. If the leverage ratio is more than 1 times, the company may not spend more than $100 million in capital expenditures yearly until Dec. 31, 2013 and not more than $75 million after that.

The company may pay cash dividends only if the leverage ratio test referenced above is 0.5% or more below the maximum and the company is in compliance with the fixed charge coverage ratio.

At closing the company drew down the entire $350 million term loan to fund the acquisition of Quinn's Oilfield Supply Ltd. last Thursday.

None of the revolving credit is now outstanding.

The loans are guaranteed by each of the company's material domestic subsidiaries and collateralized by substantially all of the company and the subsidiary's personal property assets and the equity interests of the subsidiaries held by the company or other subsidiaries.

Lufkin Industries is a Lufkin, Texas-based manufacturer and seller of oil field pumping units and power transmission products.

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