Business Context and Reporting Period
Company: Rayonier Advanced Materials Inc. (RYAM)
Filing Type: Form 8-K (Current Report)
Date of Report: December 23, 2020
Event: Completion of a private offering of senior secured notes and restructuring of credit facilities.
Key Financial Metrics and Capital Structure
- New Debt Issuance: $500 million aggregate principal amount of 7.625% Senior Secured Notes due 2026.
- Interest Rate: 7.625% per annum, payable semi-annually.
- Maturity Date: January 15, 2026 (subject to Springing Maturity Date).
- New Credit Facility: $200 million five-year senior secured asset-based revolving credit facility (ABL Credit Facility).
- Debt Repaid: All outstanding obligations under the Existing Credit Agreement were repaid, including:
- $133 million senior secured term loan.
- $366 million senior secured term loan.
- Undrawn revolving facilities totaling approximately $210 million ($84 million + $126 million).
- Use of Proceeds: Net proceeds from the Notes, combined with cash on hand, were used to repay the Existing Credit Agreement.
Material Changes Versus Prior Period
The filing details a significant refinancing event occurring on December 23, 2020:
- Termination of Prior Debt: The Company terminated the Amended and Restated Credit Agreement dated November 17, 2017, and repaid all outstanding term loans and commitments thereunder.
- Securitization Structure: The new Notes are guaranteed on a senior secured basis by RYAM and certain subsidiaries. They carry a first priority lien on real property, fixtures, and intellectual property, and a second priority lien on assets securing the new ABL Credit Facility.
- Liquidity Position: The Company replaced its previous term loan structure with a mix of long-term fixed-rate notes and a new asset-based revolving facility.
Guidance, Covenants, and Redemption Terms
Redemption Options:
- Post-January 15, 2024: Redeemable at 103.813% (first 12 months) or 100.000% thereafter.
- Pre-January 15, 2024: Redeemable at 100% plus applicable make-whole premium.
- Asset Sale Redemption: Up to $150 million may be redeemed on or prior to July 15, 2022, at 103.000% using net proceeds from asset sales.
- Equity Redemption: Up to 40% of the original principal may be redeemed on or prior to January 15, 2024, at 107.625% using net cash proceeds from equity offerings.
Covenants: The Indenture restricts the Company's ability to incur additional indebtedness, grant liens, sell assets, merge, or make restricted payments.
Risks and Contingencies: The filing notes standard events of default, including bankruptcy or insolvency. The filing text does not provide specific quantitative risk factors beyond the standard debt covenants.
Investor Verification Checklist
- Verify the exact amount of cash on hand used alongside the Note proceeds to repay the $500 million in term loans.
- Review the "Springing Maturity Date" definition in the Indenture (Exhibit 4.1) to understand potential acceleration triggers.
- Confirm the specific assets pledged as collateral for the first and second priority liens.
- Assess the impact of the 7.625% interest rate on future interest expense compared to the previous credit agreement terms.
- Monitor the utilization of the new $200 million ABL Credit Facility and its borrowing base calculations.