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Metal Management Seals New Credit Agreement with Bank
Chicago, IL— Metal Management, Inc., one of the nation’s largest full service scrap metal recyclers, announced that it has agreed with its bank group to a new $130 million credit agreement. The maturity date of the new credit agreement is July 1, 2007.
The credit agreement consists of two components. A $110 million revolving credit facility with borrowing costs based on variable rates tied to either the prime rate plus a margin or the London Interbank Offered Rate (“LIBOR”) plus a margin. The margin is dependent on the company’s leverage ratio achieved by the company for the preceding four quarters, which as currently measured results in an effective interest cost of about 3.6%. The second part of the credit agreement is a $20 million term loan with an interest cost of LIBOR plus a margin, subject to a minimum LIBOR rate, providing for an initial rate of 8.5%. The weighted average interest cost of the combined facility is approximately 4.6% based on prevailing market rates.
Proceeds from the new credit agreement will be utilized for the Company’s working capital requirements and to fund the repurchase and redemption of the Company’s 12.75% secured notes.
Albert A. Cozzi, Vice Chairman and Chief Executive Officer said, “We appreciate the support of our asset-based lenders and their commitment to Metal Management. Our new credit agreement is significant to our company as it provides for both a foundation of long-term debt and a much improved effective borrowing rate. Interest expense would be lower by approximately $3 million per year based on our current borrowings and current prevailing rates.”