American Axle amends and restates revolver and term loan to modify covenants

By Sara Rosenberg

New York, Sept. 17 - American Axle & Manufacturing Holdings Inc. amended and restated its revolving credit facility and its term loan, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Under the amended deal, the company is required to comply with revised financial covenants related to secured debt leverage and cash interest expense coverage.

The company is also required until June 30, 2010 to maintain an average daily minimum liquidity of $85 million.

Pricing on the class A revolver due December 2011 is Libor plus 600 basis points and pricing on the class B revolver due April 2010 is Libor plus 250 bps. Pricing on the term loan due June 14, 2012 is Libor plus 700 bps with a 3% Libor floor.

Borrowings under the revolver are subject to a collateral coverage test after June 30, 2010.

Security is substantially all of the company's assets.

The amendment and restatement was completed on Sept. 16.

JPMorgan and Bank of America are the joint lead arrangers and joint bookrunners on the bank debt, and JPMorgan is the administrative agent.

Also on Thursday, the company announced that it entered into a settlement and commercial agreement with General Motors Corp.

American Axle received a $110 million payment from General Motors on Wednesday for cure costs associated with contracts assumed and/or terminated by Motors Liquidation Co. in its Chapter 11 bankruptcy cases, resolution of outstanding commercial obligations, and adjustment of installed capacity levels reserved for existing and awarded programs to reflect new estimates of market demand.

Also, under the settlement agreement, General Motors' agreed to make available to American Axle an up to $100 million second-lien term loan, which was entered into on Wednesday.

Pricing on the second-lien loan is Libor plus 1,200 bps with a 2% Libor floor.

The loan allows for multiple borrowings with a minimum draw size of $25 million through Sept. 30, 2013. The loan matures on Dec. 31, 2013 and can't be terminated before June 30, 2011.

Amounts borrowed under the loan can't be prepaid until June 30, 2011 unless the source of prepayment is cash generated from ordinary course business operations. After June 30, 2011, the loan is repayable at par.

Financial covenants include secured leverage and cash interest expense coverage.

American Axle issued to General Motors about 4.1 million warrants allowing for the purchase of common stock at an exercise price of $2.76 per share. The company has also agreed to issue to General Motors up to an additional roughly 6.9 million warrants based upon the amount drawn under the second-lien loan.

American Axle is a Detroit-based producer of driveline and drivetrain systems and related components and chassis modules for the automotive industry.

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