Business Context and Reporting Period
This Form 6-K filing by Constellium SE, dated May 26, 2020, discloses the execution of new liquidity facilities and amendments to existing factoring agreements. The reporting period covers transactions finalized between April 14, 2020, and May 26, 2020, aimed at securing working capital and liquidity needs in France and Switzerland amidst the economic impact of the coronavirus pandemic.
Key Financial Metrics and Liquidity
The filing details specific debt instruments rather than consolidated financial performance metrics such as revenue or profit.
- PGE French Facility: A fully committed term loan of up to €180 million was drawn on May 20, 2020. It is 80% guaranteed by the French State. Interest is EURIBOR plus a margin of at least 1.30% and a guarantee cost of 0.50% for the first year.
- Swiss Facility: Comprises a "Covid-19 Loan" of CHF 500,000 (100% government guaranteed, no interest) and a "Covid-19 Plus Loan" of up to CHF 19.5 million (85% government guaranteed, 1.1750% interest). Total potential borrowing is approximately CHF 20 million.
- Factoring Agreements: European factoring agreements were extended to December 31, 2023. The French agreement was amended to add a €20 million recourse tranche.
Material Changes Versus Prior Period
The filing does not provide comparative financial data against prior periods. The material changes disclosed are the establishment of new government-backed credit lines and the extension of existing factoring facilities to enhance liquidity.
Guidance, Outlook, Risks, and Covenants
Management commentary is limited to the purpose of the facilities: financing working capital and liquidity needs. The filing outlines specific risks and covenants associated with the new debt:
- Financial Covenants (French Facility): Semi-annual testing begins June 30, 2021. Leverage (Net Debt/EBITDA) must not exceed 6.5x. Interest Cover Ratio must be at least 1.75x.
- Negative Covenants: Both French and Swiss facilities restrict the ability to incur additional debt, grant liens, sell assets, make acquisitions, or distribute capital to shareholders.
- Security: The French loan is secured by pledges of shares in French subsidiaries and bank accounts. The Swiss "Plus Loan" is guaranteed by a parent company guarantee up to approximately CHF 3.2 million.
- Amortization: The Swiss Facility amortizes starting June 2021, reducing by CHF 2.437 million every six months.
Investor Verification Checklist
- Verify the company's ability to meet the 6.5x leverage and 1.75x interest cover covenants starting June 30, 2021.
- Confirm the utilization of the €180 million French facility and the €20 million additional recourse tranche in the French factoring agreement.
- Monitor the impact of the Swiss Facility amortization schedule beginning in June 2021 on cash flow.
- Review the restrictions on capital distributions and intragroup loans imposed by the new negative covenants.