Challenge:
- In 2003, a group of Libra principals and partners purchased Kentucky Electric Steel, a shuttered mini-mill in Ashland, Kentucky, out of bankruptcy. At the closing, the company obtained a revolving line of credit to fund its working capital needs and provide growth capital.
- After operating results had steadily improved, the group decided to sell the mill in early 2005 to a public shell in exchange for long term subordinated notes.
- In mid 2006, the company began to explore the opportunity of refinancing their existing line of credit and obtaining a sizable term loan to buy back a portion of the outstanding subordinated notes.
Solution:
- Libra suggested that the company leverage the strength of the global steel markets to provide a lower cost of capital for the company and a liquidity event for the noteholders.
- Libra was able to successfully structure a one stop facility that expanded availability and leveraged the robust steel market to buy back a significant amount of the outstanding notes.