TimkenSteel Said to Hire PwC to Explore New Financing Optionsby
TimkenSteel Corp. hired PricewaterhouseCoopers to help explore financing options as it grapples with plunging commodity prices, according to a person with knowledge of the matter.
The steelmaker, which has been cutting costs, had $84 million in available liquidity at the end of December, Chief Executive Officer Tim Timken told analysts on a Jan. 29 earnings call. The company in the fourth quarter amended terms on a $300 million revolving credit facility based on the value of assets including inventory, machinery and equipment, he said. It had $200 million of total debt at the end of December.
The person with knowledge didn’t say which alternative funding options are being considered, and they asked not to be identified because the matter is private. TimkenSteel spokesman Joe Milicia said in an e-mail Sunday that the company has hired an adviser, without saying who it is.
The company continues to “evaluate additional financing options,” Milicia said.
Edward Caldwell, a spokesman for PricewaterhouseCoopers, declined to comment.
TimkenSteel, based in Canton, Ohio, was spun off from Timken Co. in June 2014. It posted a $69.5 million loss last year, compared with net income of $106.5 million in 2014, as revenue dropped by a third to $1.1 billion from $1.7 billion, according to data compiled by Bloomberg. Its shares fell more than 75 percent in the past year.
A drop of more than 50 percent in the steel price since September 2014 is weighing on producers that are reliant on lines of credit based on the value of their assets. “The availability on their asset-based revolving lines of credit is directly tied to what the market prices are,” said Mike Petruski, executive vice president of Great American Group, which evaluates collateral for lenders. “It’s like if someone’s credit card limit suddenly went down with the value of steel.”