Century Aluminum Company Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Century Aluminum Company on May 24, 2013. The filing reports the entry into a new material definitive agreement regarding the company's senior secured revolving credit facility.
Key Financial Metrics and Debt Structure
The company entered into a new five-year senior secured revolving credit facility with a total capacity of $125.0 million. Key terms include:
- Total Commitment: $125.0 million.
- Letter of Credit Sub-facility: Up to $80.0 million.
- Accordion Feature: Option to increase commitments by an additional $12.5 million by August 31, 2013.
- Expiration Date: May 24, 2018.
- Outstanding Borrowings: $0 as of the filing date.
- Interest Rate: LIBOR or base rate plus an applicable margin.
- Collateral: First priority security interest in accounts receivable, inventory, and certain bank accounts.
Material Changes Versus Prior Period
The new facility replaces the company's prior $100.0 million senior secured revolving credit facility, which was scheduled to expire on July 1, 2014. The new agreement increases the total available credit by $25.0 million and extends the maturity date by approximately four years.
Covenants, Risks, and Management Commentary
The new facility includes customary covenants restricting mergers, acquisitions, indebtedness, and dividends. A specific financial covenant requires the company to maintain a fixed charge coverage ratio of at least 1.1 to 1.0 if liquidity (defined as unused borrowing base capacity plus certain cash) falls below 23% of outstanding commitments. The filing notes that affiliates of the lenders (Wells Fargo and Credit Suisse) have provided financial advisory services to the company in the ordinary course of business.
Key Facts for Investor Verification
- Verify the specific interest rate margins applicable to the new facility.
- Confirm the current borrowing base calculation and eligible collateral percentages.
- Monitor the company's liquidity levels to ensure compliance with the 23% threshold triggering the fixed charge coverage ratio covenant.
- Review the full Loan and Security Agreement (Exhibit 10.1) for detailed default provisions and cross-default triggers.