New York, Jan. 7 - Oglebay Norton Co. said it amended its bank credit facilities to ease covenants. It will also have to pay an amendment fee and higher interest rates and come up with a financing plan.
The Cleveland, Ohio shipping company said it needed to modify the covenants to levels "attainable under current market conditions."
The company has already obtained a waiver of defaults and a modification of covenants effective June 30 and then a subsequent waiver for failure to comply with covenants at Sept. 30. The latest amendment closed on Dec. 24.
Under the terms of the latest amendment, Oglebay is required to hire a financial advisor to produce a financing plan that will produce a new capital structure with lower debt before the expiry of the bank borrowings. A report must be provided to the administrative agent by June 30, 2002.
Oglebay Norton's credit facility has two components totaling $350 million, a $118 million term loan and a $232 million revolving credit facility. Both expire on April 3, 2003 and both are with Keybank NA as administrative agent, Bank One, Mich. as syndication agent and The Bank of Nova Scotia, as documentation agent.
The amendment on Sept. 30, 2001, reduced the size of the revolver by $25 million to $207 million.
The latest amendment changes the commitment fee to 62.5 basis points through the end of the month in which the agent receives financial statements for the fiscal year ending Dec. 31, 2001. After that, the fee is 62.5 basis points if the company's leverage ratio is 5.00:1.00 or higher, otherwise it is 50 basis points. Previously the fee was 50 basis points or 37.5 basis points if the ratio was below 3.75:1.
Pricing of loans is Libor plus 375 basis points or prime plus 150 basis points through the end of the month in which receives financial statements for the fiscal year ending Dec. 31, 2001 are received.
After that, the interest rate is set by a grid, depending on Oglebay's leverage ratio. The amendment adds three new tiers covering leverage ratios of 5.00:1 and higher and increases the margin over prime by 25 basis points at all leverage levels.
Leverage Ratio Margin over Libor Margin over prime
6.00:1 or higher, less than 6.35:1 375 basis points 150 basis points
5.50:1 or higher, less than 6.00:1 350 basis points 125 basis points
5.00:1 or higher, less than 5.50:1 325 basis points 100 basis points
4.50:1 or higher, less than 5.00:1 300 basis points 75 basis points
4.00:1 or higher, less than 4.50:1 275 basis points 50 basis points
3.50:1 or higher, less than 4.00:1 250 basis points 25 basis points
Less than 3.50:1 225 basis points 0 basis points
The new covenants set limits for the leverage ratio, senior debt ratio, interest coverage, cash-flow coverage and net worth.
Required levels are as follows:
| Period | Leverage | Senior debt | Interest | Cash flow | Consolidated
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| ratio | ratio | coverage | coverage | EBITDA
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| Oct. 1, 2001 through Dec. 31, 2001 | 5.85:1 | 4.35:1 | 1.70:1 | 0.90:1 | $65 million
|
| Jan. 1, 2002 through March 31, 2002 | 6.35:1 | 4.80:1 | 1.60:1 | 0.80:1 | $65 million
|
| April 1, 2002 through June 30, 2002 | 6.30:1 | 4.80:1 | 1.60:1 | 0.90:1 | $65 million
|
| July 1, 2002 through Sept. 30, 2002 | 5.50:1 | 4.15:1 | 1.75:1 | 1.05:1 | $70 million
|
| Oct. 1, 2002 onwards | 5.05:1 | 3.75:1 | 1.80:1 | 1.20:1 | $72.5 million
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| | For net worth, Oglebay Norton is required to achieve $112.14 million at Dec. 31, 2001, increasing by 65% of consolidated net earnings and 100% of the proceeds of any debt or equity offerings each quarter.
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| Previously Oglebay was required to keep leverage at 4.50:1 from Oct. 1, 2001 through June 30, 2002, 4.35:1 through Sept. 30, 2002 and 4.25:1 after that. The senior debt ratio was required to be no more than 3.25 from Oct. 1 onwards.
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| The old covenants required an interest coverage ratio of 1.25:1 from July 1, 2001 through Dec. 31, 2001, 1.30:1 through June 30, 2002 and 1.40:1 after that.
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| Cash flow coverage was required to be 1.10:1 and net worth at least $122.305 million. The covenants set a minimum EBITDA of $75 million until June 30, 2002 and $80 million after that.
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| Under the new covenants, the company must also maintain at least $5 million of revolving credit availability through June 30, 2002 and $10 million after that.
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| The company paid an amendment fee of 30 basis points.
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| End
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