IBC Advanced Alloys secured credit facilities of up to $8 million established pursuant to a credit and security agreement among Iron Horse Credit and certain of IBC’s U.S. subsidiaries and an account sale and purchase agreement (ASPA) among Sallyport Commercial Finance and the subsidiaries. The credit facilities replaced IBC’s existing revolving credit facility with the Bank of Montreal.
Pursuant to the credit agreement, Iron Horse Credit will provide the IBC subsidiaries with a secured revolving credit facility of up to $4 million. Pursuant to the ASPA, Sallyport Commercial Finance will provide the subsidiaries with up to $4 million in advance purchase funding based on the sale of the subsidiaries’ accounts receivable, with up to $2.5 million to be utilized in the near term and the remaining $1.5 million to be utilized at the election of the subsidiaries. The subsidiaries will grant the lenders a senior security interest in their personal property assets, inventories and accounts receivables, subject to the terms of an intercreditor agreement.
IBC intends to use the proceeds of the credit facilities to advance the consolidation and modernization of the company’s copper alloys manufacturing facility in Franklin, IN, and for working capital purposes.
The credit agreement will accrue interest at a rate of 1.166% per month on outstanding amounts, with such interest compounded and payable monthly, and has a maturity date of 12 months, subject to further renewal. The ASPA will accrue interest at a rate of equal to the prevailing prime rate plus 2% per annum on outstanding amounts, with such interest compounded and payable monthly, as well as a factoring fee of up to 1% of account face value. The ASPA has an initial term of 12 months, subject to further renewal.
Pursuant to the terms of the credit facilities, the subsidiaries will pay aggregate fees totaling $85,000 at close and an annual facility fee of $60,000. The credit facilities are also subject to customary terms for similar credit arrangements in the United States’ manufacturing sector.
