Deutsche Bank served as administrative agent on a new $800 million asset-based credit facility for Arconic. The facility replaced Arconic’s cash flow revolver. Availability under the facility is subject to a borrowing base calculation generally based upon a set percentage of eligible accounts receivable and inventory, less customary reserves.
In addition to the new facility, Arconic closed its offering of first lien notes in the aggregate principal amount of $700 million at 6% interest per annum, with a maturity date of May 15, 2025.
“This recapitalization provides us with the right capital structure for our company moving forward,” Tim Myers, CEO of Arconic, said. “Demand for the notes and participation in the ABL facility was exceptionally strong, and as a result, we were able to upsize the recapitalization from $1.35 billion to $1.5 billion in the aggregate without any increase to pricing.”
Arconic used the net proceeds from the offering, together with cash on hand, to prepay in full the obligations outstanding under its senior secured first-lien term loan B facility, prepay in full the obligations outstanding under its revolving credit facility and terminate in full the commitments thereunder.
The notes and the ABL facility are fully and unconditionally guaranteed, jointly and severally, by each of the company’s wholly-owned domestic subsidiaries. Each of the notes and the related guarantees are secured on a first-priority basis by liens on certain assets of the company and the guarantors and on a second-priority basis by certain other assets of the company and the guarantors that constitute first-priority collateral for the ABL facility. The ABL facility is secured on a first-priority basis by liens on accounts receivable, inventory and certain other ABL priority collateral and on a second-priority basis by certain other assets.
Arconic, headquartered in Pittsburgh, is a provider of aluminum sheet, plate and extrusions, as well as architectural products for the ground transportation, aerospace, industrial, packaging and building, and construction markets.
