Harsco amends facilities to increase net leverage ratio covenant

By Rebecca Melvin

New York, June 26 – Harsco Corp. said it has obtained an amendment to its senior secured credit facilities under which required levels of its existing total net leverage ratio covenant will be increased through Dec. 31, 2021.

The credit facilities are comprised of a term loan A, term loan B and a revolver.

The amendment provides increased operating flexibility, according to a company release.

Under the amendment, the company’s net leverage is capped at 5.25 times of adjusted EBITDA for the quarter ending June 30, and 5.75 times for the last half of 2020 and first quarter in 2021.

The minimum net leverage ratio is reduced quarterly after that, reaching 4.75 times for the fourth quarter in 2021.

The rate of interest on borrowings remains unchanged unless the company’s total net leverage ratio exceeds or is equal to 4.5 times, at which point, the applicable spread to Libor is increased by 25 basis points.

Harsco expects its net leverage ratio will be about 4 times and its liquidity position will exceed $300 million at the end of the second quarter 2020.

“We believe business conditions bottomed in early second-quarter, as we mentioned previously, and our financial position and flexibility remains strong. The integration of ESOL is also progressing well and on plan. However, given that the severity and duration of the impact of the Covid-19 pandemic on the global economy is unknown, the company has sought to take proactive measures to enhance operational flexibility,” said Pete Minan, Harsco’s senior vice president and chief financial officer.

“We do not believe these covenant adjustments will be needed, but we believe it is prudent to strengthen our financial preparedness to handle this uncertain period and future economic volatility, and we are very pleased with the overwhelming support received from our bank group for this amendment.”

Citigroup Global Markets Inc., PNC Bank NA, Goldman Sachs Bank USA, Bank of America, NA, BMO Harris Bank, NA, HSBC Bank USA, NA, Royal Bank of Canada, Fifth Third Bank, NA, Huntington National Bank, KeyBank NA, ING Bank NV, Dublin Branch, Trust Bank, Bank of the West and Santander Bank, NA acted as joint lead arrangers of the credit facility.

Harsco is a Camp Hill, Pa.-based provider of diversified industrial services to the steel, aluminum, energy and railway sectors.

© 2015 Prospect News.
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