Resolute enters into new ABL Credit Facility

Resolute enters into new ABL Credit Facility

Resolute Forest Products Inc. announced that it has entered into a new five-year credit agreement for a senior secured asset-based revolving credit facility with an aggregate lender commitment of up to $600 million at any time outstanding, subject to borrowing base availability based on specified advance rates, eligibility criteria and customary reserves.  This facility replaces the company’s previous $665 million senior secured asset-based revolving credit facility, originally dated as of December 9, 2010, which was simultaneously terminated.

“We took advantage of our strong financial position and attractive market conditions to replace the ABL with a facility that gives us more flexible terms and conditions, improves pricing, extends maturity and immediately lowers our cost of capital,” said Jo-Ann Longworth, senior vice president and chief financial officer.  “This facility will support Resolute as we continue to execute on our growth and diversification initiatives for the future.”

The $600 million facility includes a $450 million tranche available to Resolute’s U.S. borrowers and its Canadian borrowers, as well as a$150 million tranche available only to its U.S. borrowers, in each case subject to the borrowing base availability of those borrowers.  The facility includes a $60 million swingline sub-facility and a $200 million letter of credit sub-facility.  The credit agreement also provides for an uncommitted ability to increase the revolving credit facility by up to $500 million, subject to certain terms and conditions.

As of today, the facility is completely undrawn, with the exception of approximately $37 million of undrawn ordinary course letters of credit.  The new credit agreement contains customary covenants, representations and warranties and events of default for asset-based credit agreements of this type.  As with the facility that it replaces, the company’s obligations under the facility are guaranteed by certain material subsidiaries and they are secured by first priority liens on accounts receivable, inventory and related assets.

The facility is provided by a syndicate of nine banks, with Bank of America, N.A., as U.S. administrative agent and collateral agent, and Bank of America, N.A. (through its Canada branch), as Canadian administrative agent.  Bank of America Merrill Lynch and Bank ofMontreal arranged the facility as joint lead arrangers and joint bookrunners; Barclays Bank and Wells Fargo also acted as joint lead arrangers and joint bookrunners.

Troutman Sanders LLP and McCarthy Tétrault LLP represented Resolute.

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