Metaldyne plans loan amendment to get new $50 million term loan, change covenants

By Sara Rosenberg

New York, Jan. 11 - Metaldyne Corp. is looking to amend its credit facility in order to gain a new $50 million term loan tranche and revise leverage and interest coverage ratios, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

Furthermore, the company anticipates that pricing on its existing revolving credit facility and term loans will be increased to take into account the new term loan pricing.

The new $50 million term loan is being sought after to enhance liquidity.

Requested leverage and interest coverage ratio changes will modify, among other things, first-quarter 2006 requirements. These covenant changes will reflect the pending sale of the company's North American Forging business and provide the company with flexibility, the filing said.

Along with the amendment, the company will be asking lenders to consent to the sale of the Forging business to Forming Technologies Inc. However, even if the sale of the business is not completed, Metaldyne plans to seek these amendments.

Proceeds from the sale of the Forging business are expected to be used to repay some existing term loan debt, reduce accounts receivable securitization facility balances and purchase assets under operating leases.

In the transaction, Metaldyne expects to receive a consideration of about $129 million, consisting of $79.2 million in cash, the retention of trade accounts receivable, the assumption by Forming Technologies of $7.5 million of outstanding indebtedness and the assumption by Forming Technologies of all other working capital items and specified liabilities of the business.

Metaldyne is a Plymouth, Mich., designer and supplier of metal-based components, assemblies and modules for transportation-related powertrain and chassis applications.

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