Arconic Rolled closes facilities, borrows $600 million under term B

By Sarah Lizee

Olympia, Wash., March 26 – Arconic Rolled Products Corp. closed its $1.6 billion of previously announced credit facilities with JPMorgan Chase Bank, NA as administrative agent and borrowed the entire $600 million under the seven-year senior secured first-lien term loan B facility on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement also provides for a $1 billion five-year senior secured first-lien revolver.

As previously reported, early last month Arconic Rolled Products set pricing on the term loan B at Libor plus 275 basis points, the low end of revised talk of Libor plus 275 bps to 300 bps and down from initial talk of Libor plus 350 bps, according to a market source.

The original issue discount on the term loan was tightened to 99.5 from 99, the source said. The term loan has a 0% Libor floor.

The term loan was downsized from $800 million as the company’s second-lien secured note offering was upsized to $600 million from $400 million.

The revolver bears interest at Libor plus 175 bps to 225 bps, based on leverage. The commitment fee on the revolver ranges from 30 bps to 40 bps, also based on leverage. Interest is initially Libor plus 200 bps and the commitment fee is initially 35 bps.

J.P. Morgan Securities LLC, Goldman Sachs Bank USA and Citigroup Global Markets Inc. are joint lead arrangers and bookrunners. ABN AMRO Capital USA LLC, BNP Paribas Securities Corp., Credit Suisse Loan Funding LLC, Deutsche Bank Securities Inc., Fifth Third Bank, NA, PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC and U.S. Bank NA are also joint lead arrangers for the facilities, and Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corp. are additional joint lead arrangers for the revolver.

Proceeds from the term loan are being used along with proceeds from the second-lien notes to help fund the separation of the company from Arconic, Inc., to pay fees, costs and expenses related to the offering and the facilities and for general corporate purposes.

Up to $300 million of the revolver may be used for the issuance of letters of credit. The letters of credit and loans under the revolver are available for working capital and other general corporate purposes.

The credit agreement contains financial covenants requiring the maintenance of a consolidated total leverage ratio of not greater than 2.5 to 1.0, with a step-down to 2.25 to 1.00 starting in the fiscal quarter ending June 30, 2021, and a consolidated interest coverage ratio of not less than 3 to 1.

Arconic Rolled is an aluminum products company.

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