Stelco plans to replace revolving term loan with lower-interest-rate facility

By Angela McDaniels

Seattle, April 9 - Stelco Inc. said it entered into a commitment letter with GE Corporate Lending Canada relating to a proposed refinancing that would replace Stelco's existing revolving term loan with a fully drawn six-year facility.

The new facility would be denominated in U.S. dollars in an amount equivalent to C$275 million and would have a significantly lower interest rate and fees compared to the existing revolving term loan, according to a company news release.

The completion of the refinancing is subject to a number of conditions that must be satisfied no later than May 11.

In relation to this refinancing, Stelco said it entered into an agreement with its lender for the existing revolving term loan to defer payment of the annual fee to May 11 from March 31. Under the agreement, the deferred fee will be waived if the existing revolving term credit facility is repaid by May 11.

"This financing, in addition to our recently enhanced asset-based loan facility, provides a favorable long-term debt structure for Stelco and is expected to reduce our financing costs," president and chief executive officer Rodney Mott said in the release.

On March 23, Stelco amended its C$600 million asset-based revolving credit facility, extending the term of the facility to 2012, increasing availability and providing the opportunity to lower the overall financing costs in the future.

Stelco is a steel company based in Hamilton, Ont.

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