Ferroglobe keeps debt static, balance sheet strong despite challenges

By Devika Patel

Knoxville, Tenn., March 17 – Ferroglobe plc has managed to keep its debt levels flat and maintain a strong balance sheet through “financial discipline” and attention to cash generation through the lowest part of the cycle.

“I would like to emphasize how, in the lowest part of the cycle, our financial discipline and focus on cash generation has allowed us to generate enough free cash flow to keep our net debt level flat,” chief executive officer Pedro Larrea Paguaga said on the company’s fourth quarter earnings conference call on Friday.

“Our balance sheet remains strong,” he said.

The company is focused on its debt structure at this time and its recent offering of senior notes generated proceeds that were used to this end.

“We completed an offering of $350 million of five-year senior notes due in 2022 with a coupon of 9.375%,” chief financial officer Joe Ragan said on the call.

“The proceeds from the offering of the notes were used primarily to repay certain existing indebtedness.

“We will continue to optimize the debt structure going forward to allow maximum flexibility during the recovery of the business.”

Ragan further noted that the company had made changes to its bank facility.

“We also amended our revolving credit facility, allowing for up to $200 million of borrowings.

“The amended revolving credit facility expires in 2018.”

Fourth quarter adjusted EBITDA was $9.1 million, down from $12.8 million in the previous quarter; full-year adjusted EBITDA was $72.9 million, down from $294.8 million year-over-year.

The company generated $75.9 million of free cash flow in the fiscal year, of which $20.3 million was generated during the fourth quarter.

Ferroglobe’s net debt was $404.6 million at the end of the fourth quarter of 2016, compared to $430 million at the end of third quarter of 2016.

Notes

On Feb. 9, Ferroglobe priced a $350 million issue of five-year senior notes (B3//B+) at par to yield 9 3/8%.

The yield printed at the tight end of yield talk set in the 9˝% area.

Goldman Sachs & Co. was the bookrunner.

The issuing entity was Globe Specialty Metals, Inc., a company subsidiary.

The London-based supplier of silicon metal, silicon-based specialty alloys and ferroalloys said it would use the proceeds to repay existing debt and to pay compensation expenses owed to Ferroglobe’s former executive chairman.

© 2015 Prospect News.
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