A.M. Castle secures commitments for exit facility and DIP financing

By Caroline Salls

Pittsburgh, June 5 – A.M. Castle & Co. executed commitment letters with PNC Bank, NA for a $125 million senior-secured revolving credit exit facility that will close when the company completes its pre-packaged financial restructuring later this summer, as well as an $85 million senior secured revolving debtor-in-possession credit facility, according to a news release.

A.M. Castle said the exit facility will be used, in part, to repay existing debt, while the DIP financing will be used, as needed, during the company’s restructuring.

“PNC’s commitment to providing working capital at competitive rates will significantly reduce our cost of capital, resulting in substantial cash interest savings of at least 70% from our current annualized rate of approximately $36 million,” A.M. Castle executive vice president and chief financial officer Patrick Anderson said in the release.

As previously reported, the company solicited votes on its proposed pre-packaged joint Chapter 11 plan of reorganization and expects to announce the results of the solicitation shortly.

The plan, supported by the company’s existing liquidity and further buttressed by the DIP facility, will allow A.M. Castle to continue to operate business as usual, including paying all vendors in a timely manner, delivering product to its customers and continuing to compensate its employees.

When it completes its proceeding later this summer, expected to be within 45 to 60 days of the pre-packaged bankruptcy filing, A.M. Castle said the exit facility will be used to refinance some existing secured debt and any DIP facility borrowings and will provide additional capital, supplementing funds contributed by new-money notes to support uninterrupted operations.

“These agreements with PNC are another step in delivering what we promised to all our stakeholders regarding the restructuring, and we look forward to announcing our next steps in the coming weeks and completing the restructuring this summer, as we originally planned,” president and chief executive officer Steve Scheinkman said in the release.

According to an 8-K filing with the Securities and Exchange Commission, the exit facility commitment letter expires on the earliest of July 31 if final definitive documentation has not been negotiated between the parties by that date, Aug. 31 if the facility has not closed by that date and the date of closing of the facility.

The DIP facility commitment letter expires on the earlier of June 30 if the facility has not closed by that date and the date of the closing of the facility.

A.M. Castle is an Oak Brook, Ill.-based distributor of specialty metal and plastic products, value-added services and supply-chain services.

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