Worthington Steel, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated June 25, 2026, details a material definitive agreement entered into by Worthington Steel, Inc. The filing reports the execution of a new asset-based revolving credit agreement and the simultaneous termination of the company's former credit facility.
Key Financial Metrics and Facility Terms
- Facility Size: New asset-based revolving credit facility (ABL Facility) with an aggregate principal amount of up to $550,000,000.
- Expansion Options:
- Uncommitted increase of up to $200,000,000 at any time.
- Committed increase of $550,000,000 to $650,000,000 prior to the "Klӧckner Increase Effective Date."
- Letters of Credit: Maximum amount of $55,000,000 (or 10% of the Maximum Revolver Amount after the Klӧckner Increase Effective Date).
- Swingline Loans: Up to 10% of the then-applicable Maximum Revolver Amount.
- Interest Rates:
- Base Rate: Greatest of 1.00%, Prime Rate, Fed Funds + 0.50%, or 1-month Term SOFR + 1.0%.
- Applicable Margin: 0.250% to 0.375% (Base Rate) or 1.250% to 1.375% (Term SOFR), fluctuating based on excess availability.
- Maturity Date: June 25, 2031.
- Collateral: Secured by a lien on substantially all assets of the Company and guarantors.
Material Changes Versus Prior Period
The Company terminated its Former Credit Agreement, dated November 30, 2023, which provided a secured revolving facility of up to $550,000,000 plus an uncommitted accordion and was set to mature on November 30, 2028. The new agreement refinances and replaces this facility, extending the maturity date to 2031 and altering the agent from PNC Bank to Wells Fargo Bank, National Association.
Guidance, Risks, and Covenants
- Use of Proceeds: Financing the Klӧckner Acquisition Transactions, working capital, general corporate purposes, and reimbursement of letters of credit.
- Covenants: The agreement includes a minimum consolidated fixed charge coverage ratio of 1.00 to 1.00, triggered only when excess availability falls below the greater of 10% of the Line Cap or $41,000,000.
- Events of Default: Includes payment defaults, covenant breaches, material inaccuracies, change in control, and insolvency. An event of default may increase interest rates and fees by 2.0% until cured.
- Intercreditor Agreement: An agreement dated June 25, 2026, governs collateral priority between this ABL Facility, the Company's term loan facility, and bonds facility.
Investor Verification Checklist
- Verify the status and timeline of the "Klӧckner Acquisition Transactions" referenced as a primary use of proceeds.
- Review the full text of the Credit Agreement (Exhibit 10.1) for specific definitions of "Line Cap" and "Klӧckner Increase Multiplier."
- Confirm the current level of excess availability to determine if the fixed charge coverage ratio covenant is currently active.
- Assess the impact of the new interest rate margins and potential 2.0% default penalty on future debt service costs.