Westlake Chemical reduces interest, pushes out maturity on revolver

By Toni Weeks

San Diego, Sept. 19 - Westlake Chemical Corp. amended and restated its $400 million senior secured revolving credit facility with Bank of America, NA as agent to extend the maturity date, reduce interest costs and increase financial flexibility, according to an 8-K filed Friday with the Securities and Exchange Commission.

The agreement extends the facility's maturity date to Sept. 16, 2016 from Sept. 8, 2013 and reduces the interest rate to Libor plus 175 to 225 basis points from Libor plus 275 to 350 bps.

The revolver now has an accordion feature allowing Westlake to increase the size of the facility four times in increments of at least $25 million each, up to a total of $150 million, if the lenders agree.

Amounts drawn under the facility are limited to (a) 85% of the net amount of eligible accounts receivable, plus (b) the lesser of either 70% of the value of the lower of cost or market of eligible inventory or 85% of the appraised net orderly liquidation value of all eligible inventory, plus (c) 100% of cash held in an account with Bank of America and subject to a control agreement with Bank of America, minus (d) such reserves as Bank of America establishes. Advances on inventory are limited to $325 million.

The facility includes a $400 million sublimit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. There is an unused commitment fee of 37.5 bps.

The amendment and restatement also

• Includes covenants that require the company to maintain a fixed-charge coverage ratio of at least 1.0:1.0 for successive 30-day periods after any date on which the borrowing availability under the facility is less than the greater of 12.5% of the commitments and $50 million, until the borrowing availability exceeds the greater of those values for a 30-day period;

• Includes covenants that restrict the company from making distributions or acquisitions and investments unless specific standards are met for the borrowing availability and fixed-charge coverage ratio;

• Allows the company to incur up to $150 million in purchase money debt and eliminates a $20 million maximum limit on the amount of capital leases the company can enter into;

• Allows the company to incur an amount of debt up to the greater of $600 million and 30% of tangible assets that are not collateral under the facility;

• Allows the company to enter into up to $150 million of sale and leaseback transactions; and

• Allows the company to prepay any debt with unrestricted cash or any of Westlake's existing senior notes with restricted or unrestricted cash, as long as no default has occurred.

Wells Fargo Capital Finance, LLC was the documentation agent, and J.P. Morgan Chase Bank, NA and Deutsche Bank Trust Co. Americas were co-syndication agents. The lead arranger and book manager was Bank of America Merrill Lynch.

The lenders include Bank of America, NA, BNP Paribas, Branch Banking and Trust Co., Comerica Bank, Compass Bank, Deutsche Bank Trust Co. Americas, JPMorgan Chase Bank, NA, Morgan Stanley Bank, NA, PNC Bank, NA, Siemens Financial Services, Inc. and Wells Fargo Capital Finance, LLC.

Westlake is a Houston-based manufacturer and marketer of basic chemicals, vinyl, polymers and fabricated products.

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