Bank of America Merrill Lynch
Bank of America Merrill Lynch (BAML) has been a key financing partner for the steel industry for over 40 years, through many of the industrys business cycles. In addition to providing $16.9 billion in credit commitments to companies that include mining businesses, metal recyclers, mills and distributors, BAML provides a full range of banking, investment banking, risk management and wealth management solutions to its metals clients.
This includes being a leading provider of asset-based credit facilities to companies in the steel industry and the manufacturers that use their products. BAML also advises the industry on how to manage risk. This includes developing interest rate management strategies and advising how to hedge commodity prices to enable the industry to offer fixed pricing on product sales and to win customer contract business. This helps BAMLs customers to position themselves for success and for growth as opportunities arise.
During 2017 BAML worked closely with its long-time client AK Steel Corp, both regarding its acquisition of Precision Partners which enabled the steelmaker to expand its capabilities to provide lightweighting solutions to its automotive customers and to support the company to drive a long-term sustainable increase in shareholder value. This included amending its existing asset-based credit facility by extending its maturity at lower interest rates, providing the steelmaker with low-cost flexibility to pursue its strategic objectives.
BAML also led an amended senior secured asset-based lending credit facility for Cleveland-Cliffs, extending its maturity and introducing several improvements to its previous agreement, which was put in place in March 2015.
Last year BAML also provided Scrap Metal Services LLC with multi-million dollar asset-based credit facilities to refinance existing debt and support the privately held scrap metals recycler, processor and brokers strategic plans. It allowed the company to retire an expensive private credit term loan and lower the interest rates on its credit facilities, resulting in substantial interest cost savings.
BMO Harris Bank N.A.
BMO Harris Bank N.A., a subsidiary of BMO Financial Group, has long been a significant provider of capital to steel mills, metal service centers, scrap metal recyclers and other specialty metal providers. The bank provides numerous companies with working capital and financial revolvers, letter-of-credit facilities, term loan and capital expenditures facilities, and other solutions to provide companies with additional financial flexibility, including financial covenant relief, borrowing base availability and flexibility and amortization periods on term loans.
While many banks and other financial institutions have abandoned the metals space due to the historical volatility of metals commodity prices, BMO Harris, which many years ago added dedicated metals groups to both its commercial and investment banking units, continues to increase the metals market share of its total business. As of July 31, 2017, metals and industrials accounted for 29% of its commitments, by comparison with 21% for retail, 17% for distribution, 13% for food and 10% for consumer goods producers.
Some of the services that BMO Harris has provided to the steel industry in recent years include working capital or revolving lines of credit, machinery and equipment loans, real estate loans, capital expenditure loans, first-in-last-out loans within revolvers, international lending support, letter-of-credit support, cash management and treasury management support, purchase cards and travel and entertainment cards, advisory services and foreign exchange trading and services.
BMO Harris says that by tailoring its capital and bank services to the steel and metals sector in a manner that meets the needs of that industrys customer base, it has been instrumental in assisting its steel and metals customers to improve their financial performance. It will continue to do so as it expands its presence in the steel and metals space, both through organic growth and acquisitions.
BMO Harris ABL Metals Bankers have invested time and capital in the steel and metals sector by speaking at various metals conferences to remain well-informed of industry trends and to be able to communicate well with the banks clients. They bring ideas and solutions that fit current market trends and company needs. The banks objective is to assist the metals industry grow and maximize its full capacity and employment levels with the use of the lowest cost of capital senior bank debt.
The metals markets improved in 2016 and 2017 and appear to be showing further growth this year. BMO Harris says that
its customers are glad to work with a lender that could provide an alternative to their existing banking relationships and one that has extensive knowledge of the metals sector.