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(Sharecast News) - Iodine and specialty Iofina has signed binding documentation to refinance its entire debt, it announced on Tuesday, by entering into a new loan agreement with the Cincinnati-based US regional bank First Financial Bank.
The AIM-traded firm said the facility would provide it with debt capital of up to $18m (£14.06m), with the proceeds to be used to pay off existing debt, and to provide it with working capital.
A total amount of $13m was available and drawn on closing of the arrangement, the board said.
The company said the facility comprised two parts, with the first being a seven-year term loan for $10m at a variable annual interest rate of 2.5% plus LIBOR, adjusted monthly.
It said the term loan was fully amortising over the term., with equal monthly principal payments.
Iofina and First Financial Bank also simultaneously entered into an interest rate swap transaction to fix the interest rate at 3.99% throughout the seven-year term of $7m in principal of the $10m term loan.
The second part of the facility consisted of a two-year asset-based revolving line of credit for up to $8m, of which $3m was available and drawn at closing.
Iofina said it was expecting to increase its use of the facility subject to ongoing borrowing base calculations and compliance with covenant ratios, as defined in the facility.
It carried a variable annual interest rate of 2.25% plus LIBOR, also adjusted monthly.
The board said the facility would be fully secured against its assets.
It said the facility contained customary financial covenants, as well as affirmative and negative covenants usual for transactions of the type, including limitations around indebtedness, liens, investments and disposition of assets.
Additionally, if the group generated excess cash flow in 2021 or 2022, it would be required to use 25% of such excess cash flow to prepay the term loan, with such prepayments due 30 June 2022 and 2023.
Those agreements would be in full effect once the wired funds were received by the current debt holders.
"The conclusion of the debt refinancing is a significant and positive step for Iofina and is the culmination of many months of hard work," said president and chief executive officer Dr Tom Becker.
"The favourable terms of this refinance demonstrate how far Iofina has progressed in recent years, given that the company has significantly reduced debt, lowered debt interest rates, and secured a strong lending bank partner.
"With the company's balance sheet significantly strengthened by the 7-year term loan in place coupled with the revolving line of credit for future growth, Iofina is focused on operational developments and expanding its production and chemicals product portfolio."
At 1418 BST, shares in Iofina were up 26.15% at 16.4p.
9 Oct 2013 09:51