Horsehead Holding announced that three of its subsidiaries, Horsehead Corporation, International Metals Reclamation Company and Horsehead Metal Products, entered into a forbearance agreement with Macquarie Bank as agent and lender. Another wholly-owned subsidiary, Zochem, entered into a forbearance agreement with PNC Bank as agent and lender.

The Macquarie Bank Forbearance Agreement

The Horsehead Corporation, The International Metals Reclamation Company and Horsehead Metal Products, all subsidiaries of Horsehead Holding, entered into a forbearance and amendment agreement related to a previous credit agreement dated June 30, 2015.

According to a recent SEC filing, Macquarie agreed to temporarily forbear from exercising rights and remedies related to certain events of default related to insufficient availability under the Horsehead credit facility.

Macquarie initially notified the borrowers of the existence of the events of default on January 5, 2016, at which time the parties commenced negotiations on the Macquarie forbearance.

During the forbearance period, borrowings will be available to the borrowers in amounts based on the borrowing base under the Horsehead credit facility, plus overage amounts specified in the Macquarie forbearance, subject to certain adjustments.

The borrowers agreed to pay down outstanding borrowings under the facility so that the aggregate amount outstanding as of the date of effectiveness of the Macquarie forbearance does not exceed $40 million, and to pay a restructuring fee in an amount ranging from $1 million to $2.5 million if the obligations under the Horsehead credit facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016.

The company will also terminate certain physical base metals contracts with Macquarie and pay a fee for such early termination in the amount of approximately $840,000. The Macquarie forbearance will not become effective until the borrowers comply with certain conditions set forth in the Macquarie forbearance, including the agreements described in this paragraph.

The PNC Bank Forbearance Agreement

On January 14, 2016, Zochem, another wholly owned subsidiary of Horsehead Holding, entered into a forbearance with respect to the revolving credit and security agreement dated April 29, 2014 with PNC Bank as agent and lender.

PNC agreed to temporarily forbear from exercising rights and remedies related to certain events of default related to the failure to comply with the required fixed charge coverage ratio under the Zochem credit facility following a transfer of funds to Horsehead.

PNC initially notified Zochem and the company of the existence of the events of default on January 6, 2016, and on January 13, 2016, based on the same events of default, demanded immediate payment of all outstanding obligations under the Zochem credit facility.

Pursuant to the PNC forbearance, all funds in any deposit account of Zochem with PNC were transferred to an account controlled by PNC. Disbursements of funds from the controlled account to Zochem are subject to a cash flow forecast as specified in the PNC forbearance.