AK Steel Completes New Credit Facility - Analyst Blog

Steel maker AK Steel Holding Corporation AKS has entered into a new 5-year revolving credit facility worth $1.1 billion with a group of lenders. The expiry of this new credit facility is expected in Mar 2019.

The new credit facility replaces the existing $1.1 billion credit facility, which was set to expire in Apr 2016. Both the new credit facility as well as the existing credit facility is secured by most of the company's inventory and accounts receivable.

The new credit facility will enhance AK Steel's liquidity and financial position with greater strategic flexibility. The new credit facility will be utilized for working capital and general corporate purposes.

The joint lead arrangers for the new credit facility were Bank of America Corporation BAC, J.P. Morgan Securities LLC, a subsidiary of JP Morgan Chase & Co. JPM, and Wells Fargo Capital Finance, LLC, a subsidiary of Wells Fargo & Company WFC.

AK Steel released its fourth-quarter 2013 results on Jan 28. The company posted net income of $35.2 million or 26 cents per share compared with a loss of $230.4 million or $1.89 per share in the year-ago quarter.

In the reported quarter, AK Steel recorded a non-cash income tax benefit of $22.7 million, or 17 cents per share, as a result of the allocation of income tax expense to other comprehensive income. The company also recorded an inventory-related credit of $4.3 million in the reported quarter.

Barring one-time items (non-cash income tax benefit), AK Steel's earnings for the quarter came in at 9 cents per share, topping the Zacks Consensus Estimate of 5 cents.

Revenues rose 2.9% year over year to $1,464.8 million in the reported quarter due to higher shipments. It exceeded the Zacks Consensus Estimate of $1,427 million. Shipments increased about 1% year over year to 1,420,000 tons due to stronger demand in automotive sales, partly offset by reduced carbon shipments to the spot market.

AK Steel currently holds a Zacks Rank #1 (Strong Buy).