Six banks have teamed up as mandated lead arrangers and bookrunners (MLABs) to launch into syndication credit facilities totalling US$500mn for steel trader Stemcor.
The facilities are split into a US$400mn 364 day revolving credit facility and a US$100mn two year forward start facility.
The MLABs are: BNP Paribas, Fortis Bank (Nederland), ING, RBS, Société Générale and Standard Chartered, who are joined by Credit Europe Bank, Credit Suisse and Development Bank of Singapore as mandated lead arrangers, and Commonwealth Bank of Australia who has agreed to act as arranger.
The US$400mn revolver will be used both for general purposes and to refinance Stemcor’s existing revolving credit facility which began on May 6, 2009.
The US$100mn forward start facility will be used to refinance Stemcor’s existing three-year facility dating from May 13, 2009.
This comes after GTR told of Stemcor’s poor first half to 2009, in which the company reported a loss of US$58mn.
A source close to the deal tells GTR: “[Stemcor] had some issues at the start of last year which they were beginning to overcome at the end of last year and the beginning of this year, which were particularly good periods for the company. We expect a strong take-up from this facility.”
Figures released by Stemcor on their full year audited results agree with this comment, as the company shows a pre-tax profit of £18.6mn (US$28.4mn) for the last half of 2009.
However, the company still reports a total loss of £26mn (US$39.6mn) for the entire year.
In an issued statement, Ralph Oppenheimer, executive chairman at Stemcor, says: “The last 18 months have been turbulent and difficult. The depression of 2009, caused by the financial crisis of 2008, was much more severe and painful for the steel industry in the developed world than any depression since the 1930s.
“The deterioration in both prices and demand for steel in the first half of 2009 was worse than had been generally predicted. The majority of steelmakers and steel stockholders have, not surprisingly, reported losses for the full year.
“The main lesson that we have learnt from this experience is to tighten up further on risk management. We live in a time of increased volatility which heightens the importance of risk controls. We feel confident that the mistakes that we made in 2009 will not be repeated.”
Oppenheimer laid some of the blame for the losses on the collapse of the automobile sectors, as well as a large default on a structured finance transaction with a CIS group.
He adds: “Structured financial arrangements to secure product and trade flows remain an important part of our activities. Looking to the future, we have a strong business model and a solid platform for resuming growth.”
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