Babcock & Wilcox's Credit Facility Increases to $1.3B - Analyst Blog

On Jun 25, 2014, energy engineering and construction services provider, The Babcock & Wilcox Company BWC announced changes in its credit facilities under the Second Amended and Restated Credit Agreement.

Per the agreement, the credit facility has been increased to $1 billion from $700 million. Babcock & Wilcox stated that it also has an option to increase this facility by $400 million, which depends on receiving additional contracts.

The agreement also provided a $300 million term loan facility to Babcock & Wilcox. Following the closure of the agreement, the company has already borrowed half the term loan amount and is now left with $150 million to draw at a later date.

This amended facility brings more good news for Babcock & Wilcox as it comes with a reduced interest rate and extended maturity date.  The interest rate to be paid on the borrowing now stands at London Interbank Offered Rate (LIBOR) plus 1.375%, lower than the earlier rate of LIBOR plus 1.5%. The new rate will be applicable starting Aug 2014. Moreover, the facility now has maturity in 2019 against the earlier expiry period of 2017.
 
Management at Babcock & Wilcox added that this increase in available credit should facilitate the company's operating and strategic initiatives and also improve financials.  

Headquartered in Charlotte, NC, Babcock & Wilcox is engaged in providing clean energy technology and services for the nuclear, fossil and renewable power markets worldwide. It currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players from the same sector like Blount International Inc. BLT, Barnes Group Inc. B and Dover Corporation DOV. While Blount International sports a Zacks Rank #1 (Strong Buy), Barnes Group and Dover Corp hold a Zacks Rank #2 (Buy).

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