GrafTech International gets $1.5 billion seven-year secured loan, $250 million five-year revolver

By Susanna Moon

Chicago, Feb. 13 – GrafTech International Ltd. obtained a $1.5 billion seven-year senior secured term facility and a $250 million five-year senior secured revolving credit facility.

The company, GrafTech Finance Inc., GrafTech Switzerland SA and GrafTech Luxembourg II Sarl entered into a credit agreement on Monday with JPMorgan Chase Bank, NA as administrative agent and as collateral agent, according to an 8-K filing with the Securities and Exchange Commission.

GrafTech Finance is the borrower for the term loan. Swissco and Lux Holdco are co-borrowers for the revolver.

At closing, GrafTech Finance borrowed $1.5 billion under the term loan facility.

Interest will be Libor plus 350 basis points on the term loans and Libor plus 375 bps on the revolver.

The term loan proceeds were used to repay all of the debt under an amended credit agreement dated Feb. 27, 2015 with JPMorgan Chase Bank, NA as administrative agent.

Proceeds also will be used to redeem GrafTech’s outstanding 6 3/8% senior notes due 2020 issued on Nov. 20, 2012 at a redemption price of 101.594% of par plus accrued interest to the redemption date.

The company said it would also use proceeds to pay a dividend with any remainder slated for general corporate purposes.

Repayments under the term loans are equal to 5% per year of the original principal amount in equal quarterly installments for the life of the term loans, with the remainder due at maturity.

The co-borrowers are permitted to make voluntary prepayments at any time without premium or penalty, except in the case of prepayments made for repricing transactions for the term loans within 12 months of closing, for which a 1% prepayment premium applies.

GrafTech Finance is required to make prepayments under the term loans without a premium with net cash proceeds from non-ordinary course asset sales and, beginning with the company’s fiscal year ending Dec. 31, 2019, 75% of excess cash flow, subject to step-downs to 50% and 0% of excess cash flow based on achievement of a senior secured first-lien net leverage ratio greater than 1.25 times but less or equal or 1.75 times and less than or equal to 1.25 times, respectively.

The term loans mature on Feb. 12, 2025 and the revolving credit facility matures on Feb. 12, 2023.

The credit agreement includes a financial covenant that requires the company to maintain a maximum senior secured first-lien net leverage ratio of 4 times when the aggregate principal amount of borrowings under the revolver and outstanding letters of credit (except for undrawn letters of credit equal to or less than $35 million), taken together, exceed 35% of the total amount of commitments under the revolver.

Based in Independence, Ohio, GrafTech manufactures graphite materials for customers in the steel manufacturing, advanced energy and electronics industries.

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