Citigroup Global Markets, PNC Bank, Goldman Sachs Bank, Bank of America, BMO Harris Bank, HSBC Bank, Royal Bank of Canada, Fifth Third Bank, The Huntington National Bank, Keybank, ING Bank, Trust Bank, Bank of the West and Santander Bank acted as joint lead arrangers on an amendment to Harsco’s existing senior secured credit facilities. The facilities consist of a term loan A facility, a term loan B facility and a revolving credit facility. Pursuant to the amendment, the required levels of the existing total net leverage ratio covenant will be increased through Dec. 31, 2021.
During this time period, Harsco’s net leverage is capped at 5.25x of adjusted EBITDA for the quarter ending June 30, 2020, and 5.75x for the last two quarters in 2020 and Q1/21; the minimum net leverage ratio is reduced quarterly thereafter, reaching 4.75x for Q4/21. The rate of interest on borrowings is unchanged, unless the company’s total net leverage ratio exceeds or is equal to 4.5x, at which point, the applicable spread to LIBOR (as defined in the documentation for the credit facility) is increased by 25 basis points. Harsco expects that its net leverage ratio will approximate 4x and its liquidity position will exceed $300 million at the end of Q2/20.
“We believe business conditions bottomed in early second-quarter, as we mentioned previously, and our financial position and flexibility remains strong. The integration of ESOL is also progressing well and on plan. However, given that the severity and duration of the impact of the COVID-19 pandemic on the global economy is unknown, the company has sought to take proactive measures to enhance operational flexibility,” Pete Minan, senior vice president and CFO of Harsco, said. “We do not believe these covenant adjustments will be needed, but we believe it is prudent to strengthen our financial preparedness to handle this uncertain period and future economic volatility, and we are very pleased with the overwhelming support received from our bank group for this amendment.”
Harsco provides environmental solutions for industrial and specialty waste streams and technologies for the rail sector.
