Business Context and Reporting Period
Company: SunCoke Energy, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: January 10, 2018
Event: Entry into a Material Definitive Agreement (Incremental Term Loan).
Key Financial Metrics and Debt Structure
This filing details a specific debt transaction rather than reporting period-end financial performance metrics such as revenue or net income.
- New Debt Incurred: $45,000,000 Incremental Term Loan.
- Purpose: To finance a portion of the repayment of outstanding 7 5/8% Senior Notes due 2019 and to pay related fees and expenses.
- Interest Rate Structure:
- Adjusted Eurodollar Rate (LIBOR) plus a margin of 1.75% to 2.25%.
- Alternate Base Rate plus a margin of 0.75% to 1.25%.
- Margins are determined by the Company's consolidated total leverage ratio.
- Maturity Date: May 24, 2022.
- Repayment Schedule: Quarterly installments of 0.625% of principal through December 2019, increasing to 1.875% thereafter through March 2022, with the remaining balance due at maturity.
- Prepayment Penalty: A 1.0% fee applies to prepayments made on or prior to May 8, 2018. No penalty applies thereafter.
Material Changes and Covenants
The incurrence of the Incremental Term Loan modifies the Company's existing credit facility under the Amended and Restated Credit Agreement dated May 24, 2017. The loan is guaranteed and secured on the same basis as existing obligations.
Financial Covenants Required:
- Maximum Consolidated Total Funded Debt to EBITDA Ratio: Not to exceed 3.25 to 1.0 for any four consecutive fiscal quarters.
- Minimum EBITDA to Interest Expense Ratio: Not to be less than 2.75 to 1.0 for any four consecutive fiscal quarters.
Restrictions: The Credit Agreement limits the Company's ability to incur additional indebtedness, make distributions, prepay or repurchase certain debt, make loans and investments, sell assets, incur liens, enter into affiliate transactions, or consolidate/merge.
Guidance, Outlook, and Risks
The filing does not provide forward-looking guidance, management commentary on future operations, or specific risk factors beyond the standard covenants and events of default associated with the Credit Agreement.
Events of Default: If an event of default occurs, lenders may accelerate amounts due, terminate commitments, foreclose on collateral, and pursue other remedial actions available to a secured creditor.
Investor Verification Checklist
- Verify the exact amount of the 7 5/8% Senior Notes due 2019 being repaid with the $45 million loan proceeds.
- Confirm the Company's current consolidated total leverage ratio to determine the applicable interest rate margin.
- Review the Company's most recent quarterly report (10-Q) to assess compliance with the 3.25:1 Debt-to-EBITDA and 2.75:1 EBITDA-to-Interest covenants.
- Check for any asset sales or additional indebtedness incurred since January 10, 2018, that might trigger mandatory prepayments.