SPX Amends Credit Pact to Allow for $1 Billion in New Borrowings
SPX Corp. (SPW), an industrial equipment maker, amended a credit agreement allowing it to increase debt by $1 billion without seeking consent from lenders, according to a regulatory filing.
The company extended the maturity on its existing credit agreement with committed financing of $2.1 billion to 2018 and may choose to add a term loan or boost its revolving credit line by as much as $1 billion, according to a filing today. The Charlotte, North Carolina-based company had $1.6 billion of total debt at the end of the three months ending Sept. 30 with its ratio of borrowings to earnings before interest, taxes, depreciation and amortization at a two-year low of 3.77 times, according to data compiled by Bloomberg.
SPX sales are expected to slide 6 percent this year to $4.8 billion according to the mean estimate of 11 analysts, after it completed the divestiture of its service solutions business in 2012. The company’s debt is rated one level below investment grade by Standard & Poor’s and Fitch Ratings, and one step lower at Ba2 by Moody’s Investors Service.
The company announced the sale of its 44.5 percent stake in EGS Electric Group LLC earlier this month with after-tax proceeds of approximately $350 million, according to a Dec. 4 statement. Through the cash from the sale, divestiture of other assets and cash on hand, SPX plans to allocate $500 million to share repurchases and reduce debt by $300 million, Chief Executive Officer Chris Kearney said in the statement.
Jennifer Epstein, a spokeswoman for SPX, didn’t immediately reply to a call seeking comment on the company’s amended credit agreement.
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