Ferroglobe in Talks With Funds to Raise New $70M-$100M Term Loan Using Super Senior Debt Capacity in SNs

Relevant Documents:
Offering Memorandum
Q2 Report
Q2 Presentation

Spanish silicon metal producer Ferroglobe is in talks with some investment funds for the provision of a new $70 million-$100 million term loan facility, sources told Reorg. In its second quarter presentation, the group said its potential lenders were finalizing their due diligence. It added that the target closing of the deal was October 2020.

Some investors would be looking for the facility to pay interest between 10% to 12%, sources said.

The new financing is expected to be super senior although any type of collateral is yet to be defined, sources said. In December 2019, the company said it had a secured lien capacity of up to $125 million and “significant” unencumbered asset value on a first-lien basis, with additional collateral value on a second and third-lien basis. The company may disclose the details of the deal in its third-quarter earnings, sources said.

Ferroglobe’s $350 million senior unsecured bonds due 2022 are quoted at 65, sources said.

Under the terms of the company’s $350 million senior notes due 2022, the group, at issuance had a baked-in super senior capacity limited to the great greater of: (i) $200.0 million and (ii) an amount such that after giving pro forma effect to its incurrence consolidated senior secured net leverage ratio of the group would not exceed 1.00x. The permitted liens covenant allows debt incurred under the super senior basket to be secured.

The group, as of June 30, had a $100 million asset backed loan facility, ABL, which was €34.4 million drawn. The facility has no leverage-based or financial-based covenants and offers reduced minimum liquidity requirement of $32.5 million. The maximum amount available under the ABL is subject to a borrowing base comprising North American inventory and accounts receivable of Ferroglobe and certain subsidiaries.

Ferroglobe is being advised by Milbank as legal advisor and Houlihan Lokey as financial advisor as it seeks to extend the maturity on its 2022 bonds.

Management told investors during a Sept. 1 earnings call that extending the maturity on the group’s $350 million 9.375% notes due March 2022 was a key priority for the company. The company’s bondholders hired financial advisor Moelis and legal advisor Weil Gotshal.

--Luca Rossi, Shan Qureshi, Connor Lovell