A.O. Smith closes $400 million five-year restated revolving facility

By Marisa Wong

Madison, Wis., Dec. 13 - A.O. Smith Corp. entered into an amended and restated credit agreement on Dec. 12, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The credit agreement amends and restates the company's existing credit facility with a $400 million revolving credit facility due Dec. 12, 2017, of which $120 million was drawn at closing.

Availability under the revolver is reduced by outstanding letters of credit, of which $1.65 million was outstanding as of Dec. 12.

The company may increase availability under the revolving facility to up to $500 million.

Interest is equal to Libor plus an applicable margin of 110 basis points to 182.5 bps, based on the company's leverage ratio.

The company must also pay a facility fee ranging from 15 bps to 30 bps and a participation fee of 110 bps to 182.5 bps. The facility fee and participation fee are also based on the company's leverage ratio.

The credit agreement requires that as of the end of any fiscal quarter the company's consolidated leverage ratio not exceed 0.6 to 1.0 and the ratio of EBITDA to consolidated interest expense for the four quarters then ended not to be less than 3.5 to 1.0.

The company intends to use the restated facility for general corporate purposes.

The company, A.O. Smith Enterprises Ltd. and A.O. Smith International Holdings BV are the borrowers under the agreement, with Wells Fargo Bank, NA as administrative agent and letter-of-credit issuer.

Wells Fargo Securities, LLC, Bank of America Merrill Lynch, U.S. Bank NA and BMO Harris Bank NA are the joint lead arrangers, joint bookrunners and co-syndication agents.

Milwaukee-based A.O. Smith manufactures residential and commercial water heating equipment.

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