Chase gets $150 million five-year revolver, repays term loan due 2017

By Angela McDaniels

Tacoma, Wash., Dec. 20 – Chase Corp. amended and restated its credit agreement on Thursday to provide for a $150 million revolving credit facility due Dec. 15, 2021, according to an 8-K filing with the Securities and Exchange Commission.

Prior to the change, the credit agreement provided for a $70 million term loan due June 2017, of which $43.4 million was outstanding as of Aug. 31, and a $15 million revolver due June 2017, which was undrawn as of Thursday.

The amended and restated credit agreement “allows for greater flexibility in our M&A program, maintains favorable borrowing rates and allows us to convert any portion to term debt. The company plans to utilize the new revolving debt agreement in line with its existing core strategies,” the company said in an investor presentation included in the SEC filing.

The company also said it will continue to use free cash flow and leveraged debt as its two main sources of capital to fund strategic initiatives.”

The new revolver has a $50 million accordion feature.

Neptco Inc. is also a borrower under the revolver.

The initial interest rate is Libor plus 150 basis points, and the initial commitment fee is 25 bps. The margin over Libor ranges from 100 bps to 175 bps, and the commitment fee is either 15 bps or 25 bps, both depending on the company’s consolidated net leverage ratio.

Subject to some conditions, the company may elect to convert all or a portion of the outstanding revolver into a term loan, which would be payable quarterly in equal installments enough to amortize the original principal amount on a seven-year amortization schedule.

Bank of America Merrill Lynch and Citizens Bank, NA are the lead arrangers and the bookrunners. Bank of America, NA is the administrative agent. Citizens Bank is the syndication agent.

The outstanding balance on the revolver is guaranteed by all of Chase’s direct and indirect domestic subsidiaries.

The credit agreement has financial covenants that require Chase and its subsidiaries to maintain a consolidated net leverage ratio of no more than 3.25 times and a minimum consolidated fixed charge coverage ratio of 1.25 times.

The credit agreement also places certain lender-approval requirements as to the size of permitted acquisitions that may be entered into by the company and its subsidiaries.

Proceeds were used to pay off the prior term loan, which was canceled along with the prior revolver. The interest rate on the prior term loan and revolver was Libor plus 175 bps to 225 bps.

Chase manufactures protective materials and is based Westwood, Mass.

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