ACM AECOM

Layne Christensen Company (LAYN) recently announced its agreement for a $135 million senior secured revolving credit facility – the ABL Facility. The company’s assets will back the five-year facility.

Layne Christian is a water management; construction and drilling company catering to the requirements of the water, mineral and energy industries across the globe. The company had cash and cash equivalents of nearly $29 million as on Oct 31, 2013 whereas its long-term debt stood at $102.7 million.

Major banks including PNC Bank National Association, a unit of The PNC Financial Services Group, Inc. (PNC), the banking unit of Wells Fargo & Company (WFC) and Jefferies Finance LLC will contribute to the ABL facility. The interest rate on the facility will be based on London Interbank Offered Rate (LIBOR) and a premium of 2.75%–3.25% based on quarterly performance. Layne Christensen has also included the accordion feature in the agreement, which entitles it to expand this credit facility to $200 million, if required.

These banks will play a significant role that range from being an administrative agent, lead arranger, book running manager, syndication agent and lender to being the co-collateral agent as well.

The company earlier had a $150 million credit facility, which was done away with as the ABL facility agreement materialized. Layne Christensen will be using about $31 million from the ABL facility to cash collateralize credit from the previous facility. The company intends to transfer all of the earlier credit to the new facility.

This new credit facility has lower borrowing costs in comparison to the earlier one, which gives Layne Christensen greater flexibility while meeting its capital requirements efficiently. This is likely to drive the company’s growth, going forward.

Layne Christensen currently has a Zacks Rank #3 (Hold). Investors interested in this sector could consider AECOM Technology Corporation (ACM) with a Zacks Rank #2 (Buy).

 
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