ArcBest refinances term loan with $150 million five-year revolver

By Toni Weeks

San Luis Obispo, Calif., Jan. 7 – ArcBest Corp. amended and restated its credit agreement on Jan. 2 with U.S. Bank NA as administrative agent, swingline lender and letter-of-credit issuer, according to an 8-K filing with the Securities and Exchange Commission.

In addition, ArcBest’s largest subsidiary, ABF Freight System, Inc., amended its receivables loan agreement on the same day with PNC Bank, NA as lender, LoC issuer and agent to extend the maturity to Jan. 2, 2018 from June 15, 2015. ABF Freight Funding LLC is the borrower under the loan agreement, and ABF Freight System, Inc. is the initial servicer.

ArcBest credit agreement

The new credit agreement provides for a $150 million five-year revolving credit facility with a sublimit of $20 million for letters of credit.

The credit facility, which matures Jan. 2, 2020, has a $75 million accordion feature.

Borrowings bear interest at Libor plus 125 basis points to 250 bps, with the actual margin based on the adjusted leverage ratio. There is a commitment fee of 17.5 bps to 35 bps, also based on leverage.

The credit facility is secured by a lien on substantially of the assets of the company and its material domestic subsidiaries and pledges of equity interests in certain subsidiaries and material domestic subsidiaries. Debt under the agreement is cross-guaranteed by the company and its material domestic subsidiaries.

The credit agreement contains customary covenants including an interest coverage ratio of no less than 3.50:1.00 and an adjusted leverage ratio no greater than 3.50:1.00.

Proceeds were used to refinance the company’s existing $70 million term loan and will also be used for general corporate purposes and working capital.

U.S. Bank is sole lead arranger and bookrunner. Branch Banking and Trust Co. and PNC Bank, NA are the syndication agents.

ABF Freight loan agreement

Besides extending the loan facility’s maturity date, the amendment made other changes to some covenants and events of default. Specifically, the adjusted leverage ratio shall be greater than 3.50:1.00, according to a separate 8-K filing with the SEC.

The agreement includes a provision under which the borrower may request standby letters of credit, primarily in support of workers’ compensation and third-party casualty claims liabilities in various states in which some ArcBest subsidiaries are self-insured.

At closing, there were no borrowings under the agreement, but $20.1 million of standby letters of credit had been issued, which reduced the available borrowing capacity to $54.9 million.

ArcBest, formerly known as Arkansas Best Corp., is a Fort Smith, Ark.-based provider of freight transportation and logistics services.

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