ThyssenKrupp AG (TKA) got permission from lenders to waive a test on its 2.5 billion-euro ($3.4 billion) credit line as the German steelmaker’s proposed sale of its Steel Americas unit takes longer than it expected.
The waiver means the company is exempt from an end-September test of its debt to equity ratio, Nicola Roettger, a spokeswoman for the Essen, Germany-based company, said in an e-mailed statement. The terms of the loan limited ThyssenKrupp’s leverage ratio to 150 percent and lenders would have been able to cancel the facility if it failed the test, according to a company report last month.
“For all financial instruments concerned by the gearing covenant, ThyssenKrupp received a waiver,” Roettger wrote. “ThyssenKrupp is exempt from the obligation of the gearing covenant on Sept. 30, 2013.”
The German company’s leverage ratio was 186 percent at the end of June following losses stemming from a decline in the value of its Steel Americas unit. ThyssenKrupp, which has been seeking to sell the division for 16 months, said in last month’s report a sale would help reduce the leverage ratio. The company said it was “confident of finding a solution for Steel Americas” before the end of September, according to an e-mailed statement in February.
Thirty-seven banks provided the credit line in 2007 and the syndicate was led by Bayerische Landesbank, BNP Paribas SA, Dresdner Kleinwort and HSBC Holdings Plc, according to data compiled by Bloomberg. The debt matures in July and was undrawn at the end of June, according to the company report.
A 207 million-euro loan from the European Investment Bank and a 630 million-euro facility, denominated in Brazilian reals provided by Brazil’s state development bank BNDES, also included a debt-for-equity covenant test, the report said.
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