Eagle Materials arranges $665 million term loan, amends revolver

By Angela McDaniels

Tacoma, Wash., Dec. 23 – Eagle Materials, Inc. established a $665 million term loan due Aug. 2, 2021 and amended its revolving credit facility on Friday, according to an 8-K filing with the Securities and Exchange Commission.

JPMorgan Chase Bank, NA and Goldman Sachs Bank USA are the bookrunners and lead arrangers for the term loan. Goldman Sachs Bank, Bank of America, NA, PNC Bank, NA, Wells Fargo Bank, NA and Truist Bank are the syndication agents. JPMorgan is the administrative agent.

The term loan proceeds will be used to buy a cement plant in Louisville, Ky., a limestone quarry in Battletown, Ky., and cement distribution terminals in Indiana, Ohio, Pennsylvania, West Virginia and Kentucky from Kosmos Cement Co. for $665 million, subject to customary post-closing adjustments.

The commitments for the term loan terminate on the earlier of the fifth business day following March 31, in the event the term loan has not been funded by then, and the termination of the asset purchase agreement without the occurrence of the consummation of the Kosmos acquisition.

The interest rate will be Libor plus a margin between 125 basis points and 200 bps, depending on the ratio of the company’s consolidated debt to consolidated EBITDA. The initial interest rate is Libor plus 175 bps.

If the term loan has not been funded by 60 days after Dec. 20, the company will pay a ticking fee of 35 bps per year.

Under the term loan agreement’s financial covenants, the company’s ratio of consolidated EBITDA to consolidated interest expense may not be less than 2.5 to 1.0 on a rolling four-quarter basis, and the company’s ratio of consolidated debt to consolidated EBITDA may not exceed 4.0 to 1.0 for the quarters ending Dec. 31 through June 30, 2020, 3.75 to 1.00 for the quarters ending Sept. 30, 2020 through Dec. 31, 2020 and 3.5 to 1.0 for each quarter ending on or after March 31, 2021.

Borrowings under the term loan agreement are guaranteed by all material subsidiaries of the company.

Revolver amendment

The company amended its revolver to modify the interest rate. The rate is now Libor plus a margin between 125 bps and 200 bps, depending on the company’s consolidated debt-to-consolidated EBITDA ratio.

The company will pay a commitment fee on unused revolving commitments equal to 15 bps to 30 bps, depending on the leverage ratio.

The amendment also modified the revolving credit agreement’s maximum leverage ratio covenant to match that of the term loan agreement.

The revolver was also amended to allow for the consummation of the Kosmos acquisition, permit the incurrence of debt under the term loan agreement and make other amendments, including allowing for borrowing under the revolver on a funds basis in connection with the Kosmos acquisition and providing for the selection of an alternate benchmark rate to replace Libor.

The company may use proceeds from the revolver to finance the Kosmos acquisition.

JPMorgan is the administrative agent.

Eagle Materials is a Dallas-based manufacturer and distributor of cement, gypsum wallboard, recycled paperboard, concrete, sand and aggregates.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.