Nexeo extends ABL revolver, increases letter-of-credit subfacility

By Angela McDaniels

Tacoma, Wash., May 8 - Nexeo Solutions Holdings, LLC subsidiaries Nexeo Solutions, LLC and Nexeo Solutions Canada Corp. amended their asset-based revolving credit facility on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The facility provides up to $500 million through a U.S. tranche and a Canadian tranche of up to $40 million in Canadian dollars.

The maturity date was extended from March 31, 2016 to the first to occur of (a) May 8, 2018 and (b) the date that is 60 days prior to the earliest stated maturity date of the company's senior secured term loan facility (or any replacement facility) in effect at any time.

The interest rate is Libor or the Canadian BA rate, as applicable, plus 150 basis points to 200 bps based on average excess availability. Previously, the spread was 225 bps to 275 bps.

The U.S. letter-of-credit subfacility was increased to $200 million from $100 million.

Subject to some conditions, the company may establish one or more foreign facilities under the revolver in an amount not to exceed the equivalent of $60 million.

The calculation of the eligible inventory component of the U.S. and Canadian borrowing bases was changed to 85% of the net orderly liquidation value of eligible inventory. Previously, it was the lesser of (a) 75% of the value of eligible inventory and (b) 85% of the net orderly liquidation value of eligible inventory.

The commitment fee was also reduced to range from 25 bps to 50 bps based on average utilization. Previously, it was 37.5 bps to 62.5 bps.

As amended, the revolver requires that if the excess availability is less than the greater of (a) the equivalent of $35 million and (b) 10% of the lesser of (i) the aggregate commitments and (ii) the then applicable combined borrowing base, then the borrower will comply with a minimum fixed charge coverage ratio of at least 1 to 1.

In addition, the amendment modified some exceptions to the negative covenants to give the company more flexibility to, among other things, make acquisitions and other investments, to make dividends and other distributions to equity holders, to prepay certain debt, to engage in certain receivables financing transactions and to incur certain additional debt.

Bank of America, NA is the administrative agent and collateral agent.

Nexeo is a Woodlands, Texas-based distributor of chemicals, plastics and composites.

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