Signature Group amends commitment letters related to acquisition

By Marisa Wong

Madison, Wis., Jan. 12 – Signature Group Holdings, Inc. entered into amendments to its previously announced backstop commitment letter and asset-based facility commitment letter, according to an 8-K filing with the Securities and Exchange Commission.

The financing agreements were made on Oct. 17 in connection with Signature’s acquisition of Aleris Corp.’s global recycling and specification alloys business.

The backstop commitment letter provided for an up to $50 million two-year secured bridge term loan (the notes backstop) and a registered direct offering of up to $45 million of common stock (the equity backstop).

On Jan. 7, the company amended the commitment letter to, among other things, extend the commitment period related to the notes backstop in exchange for the payment of fees; clarify the interest payable on any notes issuable in connection with the notes backstop; confirm that the company’s sale of equity securities in October and December reduced the size of the equity backstop and eliminated an additional potential fee payable to the backstop commitment parties; and clarify that the proceeds of asset sales or equity offerings of Signature’s indirect wholly owned subsidiary North American Breaker Co., LLC may be used to reduce the required size of a rights offering by Signature, which would in turn reduce the size of the notes backstop to a maximum amount of $20 million, in exchange for a $325,000 extension fee, with the commitment period further extendable by an additional fee.

The asset-based commitment letter provided for a $110 million senior secured revolving asset-based credit facility.

On Jan. 8, the company and GE Capital amended and restated the commitment letter to extend the commitment period through Feb. 28.

Signature is a Sherman Oaks, Calif.-based holding company that invests primarily in the U.S. industrial and commercial marketplace. The global recycling and specification alloys business is a Cleveland-based recycled aluminum company.

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