Outstanding Debt Remains Unchanged; Net Debt to Adjusted EBITDA Ratio Remains at All-Time Low

Fresh off beating analyst guidance by 30%, Barranquilla based glass and aluminum manufacturer Tecnoglass, Inc. (NASDAQ: TGLS) announced last week that it has amended its senior secured revolving credit facility to increase the borrowing capacity under its committed Line of credit from $50 million to $150 million, reduce its borrowing costs by an approximate 130 basis points, and extend the initial maturity date by one year to the end of 2026.

Borrowings under the credit facility will now bear interest at a rate of LIBOR with no floor plus a spread of 1.75%, based on the company’s net leverage ratio, compared to a prior rate of LIBOR with a floor of 0.75% plus a spread of 2.50%. The company expects the amendments to provide approximately $3 million of incremental interest expense savings on an annual basis at current outstanding borrowings.

Tecnoglass CFO Santiago Giraldo (Photo: Loren Moss)

“We’re extremely proud of our outstanding track record of financial performance and cash generation. Today’s announcement further demonstrates to our customers, employees, partners and shareholders that our business momentum is very strong and our growth investments are paying off. This transaction, which was widely oversubscribed, reduces our cost of capital while significantly enhancing our liquidity and financial flexibility. Through this refinancing, we now estimate total annual savings of approximately $15 million at current levels of outstanding borrowings, since entering into our inaugural US Bank syndicated facility in October of 2020,” said Santiago Giraldo, Tecnoglass Chief Financial Officer.

The facility was led by PNC Bank N.A as Administrative Agent; with Citizens Bank N.A, BBVA USA, CIT Bank and Wells Fargo Bank N.A serving as Joint Lead Arrangers.

“This upsized revolver positions us exceptionally well to fund future growth initiatives and to further capitalize on opportunities in the quarters and years ahead. We are extremely encouraged by the overwhelming support received by the syndicate of US and European based banks that understood the strong tailwinds in our business as well as our structural competitive advantages that are allowing us to outpace the industry and gain incremental market share. The syndicate composition and the financial costs achieved in this transaction validate the success of our strategy as a ‘US centric’ company,” added Giraldo.

The deal increases the currently untapped committed facility from $50 Million to $150 Million And reduces all-in interest from 3.25% to 1.90% at current rates.

In addition to collateral benefits, the funds “will be used to provide letters of credit to fund exploration and transportation commitments in Colombia and Peru,” said the Toronto-based company in a statement.

Frontera Energy said that this line of credit, which has an initial term of eight months as a secured credit facility, is being used to replace Frontera’s current secured letter of credit, which includes $81.9 million USD of used capacity that will mature on June 22.

Following the initial eight months, the term of the credit facility is expected to be extended to two years “upon satisfaction of certain extension conditions,” according to Frontera Energy. The provision of the new arrangement will thereby “allow Frontera to release collateral and reduce the company’s cost of funds,” stated the firm.

“During the initial term, the credit facility will have substantially the same security, covenants, and events of defaults as the [current facility] and the company’s senior secured notes due 2021,” added Frontera. “Upon satisfaction of the extension conditions, the credit facility will become an unsecured facility and the guarantors under the credit facility will be limited to the Company’s principal subsidiaries.”

READ MORE: Frontera Energy Sees Year-Over-Year Production and Sales Declines in First Quarter

The new credit facility has been arranged by Itaú Corpbanca Colombia S.A., Citibank N.A., JPMorgan Chase Bank N.A., HSBC Mexico S.A., Institución de Banca Multiple, Grupo Financiero HSBC, and Bank of America Merrill Lynch.

While the company, which has operated as an oil producer Colombia for decades, previously under the name Pacific Rubiales, has emerged from the worst of its financial and operational difficulties of recent years, challenges remain to improving its financial results.

In the first quarter of 2018, with $249.5 million USD in sales and a net loss of $3.1 million USD, it saw year-over-year declines in both profitability and oil production (which fell by around 5,000 barrels per day compared to the first quarter of 2017).

“The new facility further strengthens our balance sheet, credit profile and long-term access to capital,” said David Dyck, chief financial officer of Frontera Energy. “This gives us great confidence as we continue to position ourselves for growth in 2018.”