A syndication of almost 40 banks has awarded steel trader Stemcor a US$562mn, 364 day revolving credit facility and a US$125.5mn forward start facility.
A total of 38 lending banks were involved in the syndication which saw the revolver initially set for US$400mn and the forward start set for US$100mn.
The 364 day revolver will be used to refinance Stemcor’s existing revolving credit facility from May 6, 2009, as well as for general corporate purposes, with the forward start facility due to refinance the company’s existing three-year facility from May 13, 2008, as well as for use in general commercial purposes.
Michael Broom, group director of treasury and risk at Stemcor, says: “2009 was a tough year for all participants in the steel supply chain and, with lower volumes traded, we reduced borrowings to reflect lower working capital requirements.
“Given a strong performance in the opening months of 2010, a healthy forward order book and encouraging forecasts from independent market commentators, our banking partners share Stemcor’s confidence that the strong trading performance delivered in Q1 can be sustained and that 2010 should be a year of market recovery.”
However, Stemcor are cautiously optimistic about the future of steel trading, as Broom explains: “Prices are currently weakening after several months of appreciation and we must be wary of the double dip recession, however, Stemcor’s management believes that this is a correction and that we are not going to see a price collapse like the one we experienced in 2008. On that basis we have taken advantage of the oversubscription and closed at a level substantially higher than that quoted at launch.”
BNP Paribas was appointed as a mandated lead arranger (MLA), among other banks, and GTR speaks to Sue Mingay, head of EMEA loan sales at BNP Paribas, about commodity companies’ positions in the wider market: “Oversubscriptions like this are not a new phenomenon, but the profile of commodity companies has generally been raised because the market is much quieter at the moment on straight corporates. Commodity deals tend to have a short-term element and pricing is generally at a premium to straight corporates.
“Geographically, commodity companies are so diverse. They have subsidiaries, business or requirements for business in lots of different countries and they manage their banking relationships exceptionally well.
“All of our deals with commodity companies have gone exceedingly well, and in terms of investors involved in the deals, there’s a mix of existing banks, which tend to be a fairly stable group, and new banks coming to the sector/relationship and commodity companies are generally open to expand their banking group."
As well as BNP Paribas, other MLAs in the deal are Fortis Bank (Nederland), ING, RBS, Société Générale CIB and Standard Chartered were all appointed as mandated lead arrangers (MLA) and bookrunners, with Credit Europe Bank, Credit Suisse, Development Bank of Singapore, Credit Agricole, Garanti Bank International and Nedbank acting as MLAs.
Commonwealth Bank of Australia was the deal’s lead arranger.
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