Eagle Materials secures new $300 million term loan

Eagle Materials Inc . (NYSE:EXP), a prominent player in the hydraulic cement industry with a market capitalization of $8.43 billion, secured a new credit agreement on Monday, enhancing its financial flexibility. The Dallas-based company, which maintains a "GREAT" financial health score according to InvestingPro analysis, entered into an amendment to its existing unsecured credit agreement, which involved refinancing its term loan facility and revamping its revolving credit facility.

The amendment introduced a new $300 million senior unsecured term loan A credit facility, the proceeds of which were utilized to refinance the existing $200 million term loan facility. Additionally, the funds were used to repay a portion of the outstanding loans under the previous revolving loan facility and cover transaction-related fees and expenses. This refinancing aligns with the company’s strong liquidity position, as evidenced by its healthy current ratio of 2.76 and the fact that its liquid assets exceed short-term obligations, as revealed in InvestingPro’s detailed financial analysis.

Alongside the term loan, Eagle Materials also established a new senior unsecured revolving credit facility totaling $750 million, which supersedes the prior arrangement. Both the new term loan and the revolving credit facility are set to mature on February 4, 2030.

The company has further financial maneuverability with an uncommitted incremental facility of up to $375 million, available for general corporate purposes, including working capital needs and potential acquisitions.

Eagle Materials has the option to choose the interest rate for the loans under the new agreement, either based on a base rate or a secured overnight financing rate (SOFR), with the addition of an applicable rate determined by the company’s senior unsecured long-term debt rating.

The credit agreement stipulates covenants similar to the previous agreement, imposing restrictions on Eagle Materials and certain subsidiaries. These restrictions include limitations on changes of control, mergers, asset disposals, lien creation, and incurring additional debt, subject to specific conditions and thresholds.

This strategic financial move, detailed in the company’s recent SEC filing, positions Eagle Materials to continue its operations and expansion with enhanced capital resources. The company maintains a conservative debt profile with a total debt-to-capital ratio of just 0.11, and its cash flows sufficiently cover interest payments. For investors seeking deeper insights into Eagle Materials’ financial health and growth prospects, InvestingPro offers comprehensive analysis through its Pro Research Report, part of its coverage of over 1,400 US equities.

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