Associated Materials carves $12 million tranche B out of revolver

By Angela McDaniels

Tacoma, Wash., May 2 - Associated Materials, LLC amended its revolving credit agreement on April 26, according to an 8-K filing with the Securities and Exchange Commission.

Among other things, the amendment

• Reallocates $8.5 million of the $150 million U.S. revolving credit commitments as U.S. tranche B revolving credit commitments and the remaining $141.5 million as U.S. tranche A revolving credit commitments; and

• Reallocates $3.5 million of the $75 million Canadian revolving credit commitments as Canadian tranche B revolving credit commitments and the remaining $71.5 million as Canadian tranche A revolving credit commitments.

The tranche B revolving facilities are "first-in, last-out," which requires the entire principal amount available for borrowing to be drawn in full before any loans may be drawn under the tranche A revolving facilities, and they are subject to separate borrowing base restrictions.

The tranche B revolving facilities are available for borrowing only from Jan. 1 to Sept. 30 of each year and must be repaid in full by Oct. 1 of each year.

In connection with the amendment, the interest rate margins, which are determined by reference to the level of borrowing availability under the tranche A revolving facilities, were increased by 200 basis points for each loan under the tranche B revolving facilities.

The interest rate is Libor plus 250 bps to 300 bps for tranche A borrowings and Libor plus 450 bps to 500 bps for tranche B borrowings.

The outstanding swingline loans and outstanding letters of credit have been continued under the tranche A revolving facilities, as applicable.

The company said it entered into the amendment as part of a broader effort to optimize its capital utilization. The amendment provides for up to $12 million of additional advances on inventories and receivables from Jan. 1 through Sept. 30 of each year, providing more consistent revolver availability during the working capital build-up associated with heavier sales during this period.

Associated Materials believes that it has adequate liquidity to meet its currently anticipated business needs without giving effect to this additional liquidity.

The company had borrowing availability under the credit agreement of $54.3 million as of March 31. After giving pro forma effect to the amendment, the borrowing availability would have increased to $61.7 million.

The amendment does not impact the covenants under the credit agreement.

UBS Securities LLC, Deutsche Bank Securities Inc. and Wells Fargo Bank, NA are the lead arrangers and bookrunners. UBS AG, Stamford Branch and UBS AG, Canada Branch are the administrative and collateral agents.

Associated Materials manufactures and distributes exterior residential building products and is based in Cuyahoga Falls, Ohio.

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