TORONTO, ONTARIO--(Marketwire - May 4,
2009) - Russel Metals Inc. (TSX:RUS) announced that on May 1, 2009 it
amended and restated its credit agreement with a syndicate of banks. The
amendment increases the credit available under the facility to
Cdn$252.5 million related to borrowings and letters of credit. In
addition, it provides for an adjustment to earnings used in the fixed
charge coverage ratio for up to $200 million of non-cash inventory
write-downs and any write-down of goodwill and intangible balances
currently on the balance sheet. The amended facility expires on April
29, 2011.
We are required to maintain a fixed charge coverage ratio of 1.1 to 1. The
fixed charge coverage ratio is measured at the end of each fiscal
quarter. The numerator consists of the trailing 12-month earnings
before depreciation, amortization, interest and taxes, adjusted for
non-cash inventory write-downs of up to $200 million and the write-down
of goodwill and intangibles, less (i) current taxes included in our
provision for income taxes for the 12-month period, (ii) the dividend
declared in the next following quarter multiplied by four, and (iii) in
certain circumstances capital expenditures during the 12-month period. The
denominator consists principally of interest expense, scheduled
principal repayments on long-term debt (currently not applicable) and
the principal component of payments under capital leases.
Marion Britton, Vice President and CFO, stated, "We believe that
the increased availability and the amendments to our fixed charge
coverage ratio provide sufficient liquidity to allow us to pay a
dividend and manage our operations through this business cycle. We will
report an inventory write-down for a portion of the $200 million in the
first quarter of 2009; however, we do not anticipate utilizing the
adjustment to the fixed charge coverage ratio until the second half of
the year."
Russel Metals is one of the largest metals distribution companies in
North America. It carries on business in three metals distribution segments:
metals service centers, energy tubular products and steel distributors,
under various names including Russel Metals, A.J. Forsyth, Acier
Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T
Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars,
JMS Russel Metals, Leroux Steel, McCabe Steel, Megantic Metal, Metaux
Russel, Metaux Russel Produits Specialises, Milspec Industries, Norton
Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals
Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph
Tubular & Supply, Wirth Steel and York-Ennis.
|