Fairmount Santrol Completes Debt Refinancing With a New $700 Million, 5-Year Term Loan Facility and Secures a New $125 Millio...
November 01 2017 - 11:56AM
Fairmount Santrol (NYSE:FMSA), a leading provider of
high-performance sand and sand-based product solutions, today
announced it entered into a new Term Loan B credit facility to
refinance its existing Term Loan B credit facilities and also
secured a new revolving credit facility resulting in extended
maturities. As part of the refinancing, the Company used cash
on hand to continue to reduce its overall debt. The new Term
Loan B credit facility retains the minimal covenant features of the
Company’s previous loans.
As of September 30, 2017, the Company’s outstanding Term B-2
Loans and Extended Term B-1 Loans balance was $781.4 million, which
is net of $1.3 million from the original issue discount. The
Company entered into an agreement for a new $700 million, 5-year
Senior Secured Term Loan B (the “Term Loan B”) and a new $125
million, 5-year asset-based revolving credit facility (the “ABL
Revolver”) to refinance the majority of its existing Term B-2 Loans
and Extended Term B-1 Loans. The remaining $82.7 million in
Term B-2 Loans and Extended Term B-1 Loans were paid off by using
$32.7 million of cash on hand and $50 million that the Company
borrowed upon closing the new ABL Revolver. The Company also
expects to incur approximately $8 million for cash fees and other
costs associated with the refinancing in the fourth quarter
2017. In addition, the Company expects to book a non-cash
write-off of part or all of the deferred financing fees associated
with the prior term loans and revolving credit facility in the
fourth quarter 2017. Pro forma total debt following the
refinancing is expected to be $752.9 million versus $794.5 million
as of September 30, 2017.
The new Term Loan B will mature in the fourth quarter of 2022
and will bear interest at an annual rate of LIBOR plus 6.0% with a
LIBOR floor of 1.0%. The Term Loan B has annual principal
amortization payments of 2.5%, or $17.5 million, for the first half
of the term and 5%, or $35 million, for the second half of the
term, to be paid in quarterly installments with the balance payable
at the maturity date. The new Term Loan B credit facility
does not have any financial maintenance covenants and has an option
to increase the facility by $50 million.
The new ABL Revolver, which expires in the fourth quarter of
2022, has a borrowing capacity of up to $125 million, based on a
percentage of eligible accounts receivable and inventory balances,
with an option to increase the facility by $50 million. The
ABL Revolver is secured primarily by accounts receivable and
inventory, and the Term Loan B primarily by the remaining assets.
The ABL Revolver will initially bear interest at an annual
rate of LIBOR plus 1.75%, with the borrowed balance payable at the
maturity date. This rate will adjust based on availability
under the facility with an upper limit of LIBOR plus 2.0%.
The ABL Revolver replaces the Company's existing $100 million
revolving credit facility, and is expected to provide more
liquidity for the Company.
Barclays acted as the Lead Arranger, Sole Bookrunner and
Administrative Agent on the Term Loan B refinancing
transaction. PNC Capital Markets LLC was the Lead Arranger,
Sole Bookrunner and Administrative Agent for the ABL Revolver.
At the time of the refinancing, the Company’s Corporate Family
Rating from Moody’s was B3 with a stable outlook, reflecting a
recent upgrade from Caa1 with a positive outlook. S&P and
Fitch both reiterated their ratings of B- with a stable
outlook.
Michael Biehl, Executive Vice President and Chief Financial
Officer, commented, “We are pleased to have completed this
refinancing prior to the end of 2017, meeting our previously stated
goal. This successful debt refinancing is the next phase in
our measured approach to improve Fairmount Santrol’s capital
structure and reduce the Company’s total debt levels.”
Fairmount Santrol will provide more details of the refinancing
transaction during its third-quarter earnings conference call that
will be held on November 2, 2017, at 10:00 a.m. Eastern Time.
Investors are invited to listen to a live audio webcast of
the conference call by visiting the Investor Relations section of
the Company's website, FairmountSantrol.com. The call can
also be accessed live by dialing (833) 287-7902 or, for
international callers, (647) 689-4466. The conference ID for the
call is 95267930.
About Fairmount Santrol
Fairmount Santrol is a leading provider of high-performance sand
and sand-based product solutions used by oil and gas exploration
and production companies to enhance the productivity of their
wells. The Company also provides high-quality products, strong
technical leadership and applications knowledge to end users in the
foundry, building products, water filtration, glass, and sports and
recreation markets. Its expansive logistics capabilities include a
wide-ranging network of distribution terminals and railcars that
allow the Company to effectively serve customers wherever they
operate. As one of the nation’s longest continuously operating
mining organizations, Fairmount Santrol has developed a strong
commitment to all three pillars of sustainable development, People,
Planet and Prosperity. Correspondingly, the Company’s motto and
action orientation is: “Do Good. Do Well.” For more information,
visit FairmountSantrol.com.
Forward-Looking Statements Certain statements
contained in this press release constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements represent the
Company’s expectations or beliefs concerning future events, and it
is possible that the results described in this press release will
not be achieved. These forward-looking statements are subject to
risks, uncertainties and other factors, many of which are outside
of the Company’s control that could cause actual results to differ
materially from the results discussed in the forward-looking
statements. These factors include: changes in prevailing economic
conditions, including continuing pressure on and fluctuations in
demand for, and pricing of, our products; loss of, or reduction in
business from the Company’s largest customers or their failure to
pay the Company; possible adverse effects of being leveraged,
including interest rate, event of default or refinancing risks, as
well as potentially limiting the Company’s ability to invest in
certain market opportunities; the level of cash flows generated to
provide adequate liquidity; our ability to successfully develop and
market new products, including Propel SSP® and related products;
our rights and ability to mine our property and our renewal or
receipt of the required permits and approvals from government
authorities and other third parties; our ability to implement and
realize efficiencies from capacity expansion plans, facility
reactivation and cost reduction initiatives within our time and
budgetary parameters; increasing costs or a lack of dependability
or availability of transportation services or infrastructure and
geographic shifts in demand; changing legislative and regulatory
initiatives relating to our business, including environmental,
mining, health and safety, licensing, reclamation and other
regulation relating to hydraulic fracturing (and changes in their
enforcement and interpretation); silica-related health issues and
corresponding litigation; seasonal and severe weather conditions;
and other operating risks that are beyond our control.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, the Company does
not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. New factors emerge from time to time,
and it is not possible for the Company to predict all such factors.
When considering these forward-looking statements, you should keep
in mind the risk factors and other cautionary statements in
Fairmount Santrol Holdings Inc.’s filings with the Securities and
Exchange Commission (“SEC”). The risk factors and other factors
noted in our filings with the SEC could cause our actual results to
differ materially from those contained in any forward-looking
statement.
Investor contacts:Indrani
Egleston440-214-3219Indrani.Egleston@fairmountsantrol.com
Matthew
Schlarb440-214-3284Matthew.Schlarb@fairmountsantrol.com
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