Milacron Inc.'s main lender has again relaxed terms of its revolving credit line, giving the plastics machinery maker some breathing room as it moves to refinance debts totaling more than $150 million, which are due March 15.
The Cincinnati-based plastics machinery maker announced the news Dec. 2.
``Our bank group has been very supportive and continues to provide us with the flexibility we need,'' Ronald Brown, chairman, president and chief executive officer, said in a news release. ``This amendment enables us to move forward and focus our efforts on putting in place more permanent financing for our short-term and our long-term debt. It also comes at a good time, as we are now experiencing an upturn in orders for our industrial fluids and in the nonmachinery portion of our plastics technologies businesses.''
This marks the second time in recent months that the banking group, which includes Deutsche Bank and PNC Bank, has relaxed terms of Milacron's revolving credit line. In August, the covenant that specifies minimum levels of EBITDA (earnings before interest, taxes, depreciation and amortization) was relaxed for the third and fourth quarters of 2003. The banks also raised the limit on restructuring expenses.
According to the Dec. 2 announcement, the banks have again relaxed EBITDA, by $4 million for the fourth quarter.
Back in August, the bank group had left one covenant unchanged: a final step-down to a $55 million cap on the revolving loan, from the cap of $65 million.
That step-down had been set for Dec. 15. But Milacron said the banks have waived the $10 million reduction, and now $65 million is again the maximum amount available for borrowing under the revolving loan. Milacron said it is currently using $54 million from the revolving loan. The availability of the remaining $11 million is subject to some restrictions, based mainly on the company's cash position. Milacron also said it holds more than $60 million in cash.
March 15 is the deadline for paying the revolving loan and $115 million in bonds.
Milacron, traded on the New York Stock Exchange, is refinancing its debts - and trying to return to profitability - during a major three-year downturn for plastics machinery.
Company executives repeatedly have declined to talk about specific refinancing alternatives, citing securities laws. Analysts again asked Brown about the subject during Milacron's third-quarter conference call, Oct. 31.
``We're not looking for a quick fix in order to get it done,'' Brown said. ``We're committed to finding what we feel is the best comprehensive long-term solution and one that is best for all of our stakeholders.''
Analysts said potential options include issuing junk bonds, selling more stock or issuing a convertible bond that can be exchanged for stock. Several analysts also think Milacron could sell assets, especially its metal-cutting fluids business, to help pay off its debt.