Horizon Global nets $225M loan facility to pay down near-term maturities

Horizon Global Corp. received a $225 million loan facility due 2027, with proceeds earmarked to address near-term debt maturities and give the borrower more financial flexibility. Atlantic Park Strategic Capital Fund LP is administrative agent.

The facility includes a $100 million initial term loan and a $125 million delayed-draw term loan, or DDTL. Interest is L+750, with a 1% Libor floor. The term loan is non-call in year one and features a call premium of 102.5 in years two through five, falling to par thereafter.

The term loan does not amortize. The loan's maximum total net leverage covenant will not be tested until March 31, 2023, giving the borrower "significant headroom" relative to earnings forecasts and deleveraging.

The DDTL has a 25-basis-point ticking fee when undrawn. The DDTL is available in three borrowings until June 30, 2022.

As for the use of proceeds, the DDTL has the capacity to repay the company's convertible notes due July 2022. After the borrower repays the convertible notes, the next significant maturities it faces are in February 2027.

Proceeds from the facility will also be used to repay a term loan due April 2022. Cortland Capital Market Services LLC is administrative agent on that agreement, successor to J.P. Morgan. Interest on the new loan represents a decline in borrowing costs. Under terms of a 2020 replacement agreement for term loan commitments, covering debt of $87.6 million, interest was 4% cash and 6.75% pay-in-kind, or PIK.

As part of the transaction, Atlantic Park will receive equity warrants to buy up to 10% of the company's common stock for $9 per share.

At the same time, the company amended an asset-based loan agreement dating from March 2020 that allowed for the new term loan. Encina Business Credit LLC is administrative agent. Borrowers are Horizon Global Americas Inc. and Cequent Towing Products of Canada Ltd.

Horizon Global makes towing and trailer equipment.