Forum Energy Technologies Inc. (NYSE: FET) has entered into an amended credit facility with its bank syndicate. The $200 million credit facility reduces Forum’s ongoing annual commitment fees on the undrawn facility by $2.25 million and lowers the earnings based covenants to provide for greater borrowing availability during the prolonged industry downturn.
Key elements of the credit facility include:
- Total lender commitments reduced to $200 million from $600 million with an ability to increase the credit facility by an additional $150 million, subject to certain restrictions
- Maximum total leverage ratio and minimum interest coverage ratio eliminated
- Maximum senior secured leverage ratio as of each quarter end increased to 4.50 times from 3.50 times through Dec. 31, 2016, 4.0 times through 2017, and 3.5 times through the maturity of the facility
- Added a new minimum fixed charge coverage ratio of 1.25 times that is only tested if availability falls below certain levels.
Availability under the credit facility is subject to a borrowing base comprised of eligible accounts receivable, inventory and cash. The credit facility maturity date of November 2018 was not changed. As of Dec. 31, 2015, Forum had no borrowings outstanding under the credit facility and $12.7 million of outstanding letters of credit.
Cris Gaut, Forum’s chairman and CEO, commented, “This amendment reduces our cost by eliminating borrowing capacity we were unlikely to use, and provides sufficient availability for potential acquisitions and anticipated capital needs. We believe the amended facility will provide our shareholders further confidence that Forum is among the select group of companies that has staying power throughout this downturn.”
Forum Energy Technologies is a global oilfield products company, serving the subsea, drilling, completion, production, and infrastructure sectors of the oil and natural gas industry.