Xerium remains focused on executing its global restructuring initiatives and the terms of the new credit facilities provide management with the flexibility to pursue these initiatives as well as pursue new growth opportunities.
Activities that can now be accelerated due to this successful refinancing include:
- Rightsizing SG&A headcount in Europe and North America
- Implementing low cost production sites in Mexico and China
- Closing high-cost production sites in Europe and the Americas and redeploying existing equipment into lower cost locations
- Expanding Xerium’s new product development agenda to enter new market segments more quickly
- Hiring select industry experts in new, targeted market segments
- Acquiring next generation production equipment to both lower operating costs and increase product quality
- Increased flexibility to pursue an acquisition agenda to advance revenue repositioning activities
The refinancing transaction includes the following:
- A new $200 million “covenant lite” term loan credit facility replacing the existing multi-currency term loan
- A new $40 million US and Canadian asset-based revolving line of credit replacing the existing $30 million multi-currency revolving line of credit
Key terms of the new financing include the following:
- Increased borrowing capacity and approximately 400 basis point decrease in interest rates under the new asset-based revolving line of credit
- A 25 basis point increase in interest rates over the life of the term loan as compared to the prior term loan
- Elimination of quarterly financial maintenance ratio tests
- Increased capacity for capital expenditures, restructuring and acquisitions as compared to the prior term loan
Harold Bevis, Xerium's President and Chief Executive Officer, stated, "We are thankful to our lender group for supporting Xerium’s ongoing operational improvement initiatives. The new capital structure allows us to implement what we believe are game-changing improvements to our business. We are now poised to accelerate some of our planned activities.”
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