Orion reprices its term loan B into ‘most competitively priced’ debt

By Devika Patel

Knoxville, Tenn., May 18 – Orion Engineered Carbons SA repriced its term loan B debt, cutting the dollar tranche margin by 50 basis points and the euro tranche margin by 25 basis points, which made the debt “among the very most competitively priced of any” debt within the company’s rating category.

The company also swapped its borrowings to dollars from euros.

These actions resulted in a $4.7 million savings per year in interest costs and added about 8 cents per year to the company’s earnings per share.

“Effective May 2018, we once again repriced our euro and dollar term loan B debt achieving a further 50 basis point reduction on the dollar tranche margin and 25 basis point reduction on euro tranche margin, thus once again making our term loan B debt among the very most competitively priced of any for our rating category,” chief financial officer Charles Herlinger said on the company’s first quarter ended March 31 earnings conference call on Friday.

“Having accomplished this, we then proceeded to swap our dollar-denominated debt to euros to better align our group cash flows with our new U.S. dollar group reporting currency,” Herlinger said.

These actions will save the company $4.7 million per year in interest costs over the six years remaining until the term loan B debt matures and will increase earnings per share by 8 cents annually.

“This redenomination of our debt from dollars to euros also has the significant added benefit of achieving an additional interest cost reduction, over and above the repricing of our debt, of $4.7 million per year for the six plus years to maturity of this term loan B debt,” Herlinger said.

“Both the repricing and this redenomination of our debt are expected to boost earnings per share by some 8 cents annually,” he said.

Adjusted EBITDA increased $13.4 million, or 21.4%, to $76 million in first quarter of 2018 compared to $62.6 million in the first quarter of 2017.

As of March 31, 2018, the company had cash and cash equivalents of $59.7 million, a decrease of $12.6 million from Dec. 31, 2017.

Orion Engineered Carbons is a Frankfurt-based producer of carbon black.

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