Charah Solutions entered into a new $280 million senior credit facility, which included a refinancing of its $205 million term loan, an upsizing of its revolving credit facility from $45 million to $50 million and a $25 million delay draw term loan that can be exercised at the company’s discretion.
The improved terms reflect, among other things, the company’s reduced leverage following its IPO in June 2018, its financial performance and current market conditions.
The new facility matures on September 21, 2023 and replaces the company’s prior revolver and term loan agreement from October 2017. The term loan will initially bear interest at a rate of LIBOR plus 2.50%, which represents a 375 basis point reduction from the previous rate of LIBOR plus 6.25%.
“We are pleased to complete this refinancing on terms that will provide Charah with greater financial flexibility and better position the company for long-term success,” said Bruce Kramer, chief financial officer and treasurer of Charah. “This transaction reduces our annual interest expense, results in additional delivering over time and provides us modest additional liquidity. We remain committed to prudently managing our balance sheet and enhancing value for our shareholders through our disciplined capital allocation strategy.”
Total debt service associated with the new term loan is not expected to be materially different from the previous term loan. Interest expense is expected to be approximately $8 million lower in 2019, which will benefit the company’s earnings. The amortization schedule of the new term loan will result in additional delivering (the amortization requirement of the previous term loan was prepaid through June 2020 with proceeds of the IPO).
Charah Solutions provides mission-critical environmental and maintenance services to the power generation industry.