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Richmond-based Tredegar Corporation (NYSE:TG), a manufacturer in the nonferrous metal industry with a market capitalization of $280 million, has amended its asset-based lending (ABL) facility, according to a recent 8-K filing with the Securities and Exchange Commission. According to InvestingPro analysis, the company maintains a healthy financial position with a solid current ratio of 1.56 and moderate leverage, despite not being profitable over the last twelve months. The amendment, made with JPMorgan Chase (NYSE:JPM) Bank, N.A. as the administrative agent and lender, along with other banks, enhances the terms of its credit agreement.
On Monday, Tredegar entered into the Fifth Amendment to its credit agreement, which was originally dated June 29, 2022. This amendment extends the maturity date of the facility to May 6, 2030, and reduces the interest rate margins to a range of 1.75%-2.25% for Term Benchmark Loans and RFR Loans, and 0.75%-1.25% for ABR Loans, based on average quarterly availability.
Additionally, the commitment fee has been decreased from 0.40% to either 0.25% or 0.375%, depending on the Average Usage as defined in the amended facility. The borrowing base calculation has also been revised, excluding real property, altering the PP&E Component, and capping the amount of eligible cash at 15% of the borrowing base.
The amended ABL Facility now includes a Cash Dominion Period, triggered when availability falls below certain thresholds, and compliance with the fixed charge coverage ratio is triggered when availability is less than a specific percentage of the Line Cap. With a total debt to capital ratio of 0.22 and an overall Financial Health score rated as "GOOD" by InvestingPro, the company appears well-positioned to manage its debt obligations. Subscribers to InvestingPro can access additional insights and metrics to better understand Tredegar’s financial position.
Tredegar Corporation regularly engages lenders for various banking services, all of which are negotiated at arm’s length. The full details of the Fifth Amendment are included in Exhibit 10.1 attached to the SEC filing, which provides a complete reference to the terms of the agreement.
This strategic move aims to enhance the company’s financial flexibility by extending the maturity of its credit facility and reducing borrowing costs. The stock has shown strong momentum, gaining 7.68% year-to-date, though InvestingPro analysis suggests the stock is currently trading above its Fair Value. The information is based on a press release statement and InvestingPro data.
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