Steelcase gets $125 million five-year revolver at Libor 87.5-150 bps

By Wendy Van Sickle

Columbus, Ohio, Sept. 28 – Steelcase Inc. closed a $125 million committed five-year unsecured revolving syndicated credit facility on Sept. 23 with J.P. Morgan Chase Bank as bookrunner and lead arranger, according to an 8-K filing with the Securities and Exchange Commission.

Interest on the loans is Libor plus 87.5 basis points to 150 bps, based on leverage. The facility fee ranges from 12.5 bps to 25 bps.

The facility amends and restates Steelcase’s syndicated facility set to expire in March 2017.

Steelcase may boost the total commitments under the facility by up to $75 million by obtaining at least one more commitment. There are currently no borrowings outstanding under the facility.

JPMorgan Chase is the administrative agent. Bank of America, NA and Wells Fargo Bank, NA are the syndication agents, and HSBC Bank USA, NA is the documentation agent.

Proceeds will be used for general corporate purposes, including friendly acquisitions.

Under the loan terms, Steelcase must satisfy two financial covenants:

• A maximum leverage ratio of debt to adjusted EBITDA of no more than 3 times. For certain acquisitions, Steelcase has a one-time ability to increase the maximum ratio to 3.25 times for four consecutive quarters; and

• A minimum interest coverage ratio of adjusted EBITDA to interest expense of at least 3.5 times.

The facility also requires Steelcase to comply with other covenants that include a restriction on the amount of cash dividend payments and share repurchases in any fiscal year. In general, as long as the company's leverage ratio is less than 2.5 times, there is no restriction on cash dividends and share repurchases. If the company's leverage ratio is between 2.5 times and the maximum then permitted, the company's ability to pay more than $35 million in cash dividends and share repurchases in any fiscal year may be restricted, depending on the company's liquidity.

The previous facility was provided by JPMorgan Chase Bank, NA as administrative agent and Bank of America, NA, Fifth Third Bank and Wells Fargo Bank, NA as documentation agents.

The company is a Grand Rapids, Mich.-based office furniture manufacturer.

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