The Sherwin-Williams Company (SHW) has recently entered into a 5-year $1.05 billion New Credit Agreement, with lenders including Bank of America Corporation (BAC) as an administrative agent, Wells Fargo & Company (WFC) as syndication agent and JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) as co-documentation agents. The proceeds from the new facility are likely to be used for general corporate purposes and working capital.
Under the terms of the new agreement Sherwin Williams can expand its existing facility only with the approval of the lenders and their participation in each increase. The increase can be done for an additional amount of $250 million. The new credit facility will mature on July 8, 2016 and bestows the right on Sherwin-Williams to request the lenders to extend the maturity for two additional periods of one year each.
The new credit agreement terminated the earlier credit agreement of $500 million for three years with effect from July 8, 2011, which would mature on January 8, 2013. Both the agreements are similar in terms of representations, warranties, covenants and events of default, except that the new agreement contains a clause that at any point in time Sherwin-Williams will have to maintain a consolidated leverage ratio of 3.25:1. Shares of Sherwin-Williams presently retain a Zacks #3 Rank (short-term Hold recommendation).
Founded in 1866 and headquartered in Cleveland, Ohio, The Sherwin Williams Company manufactures and markets paints, coatings and related products, primarily in the North and South America. The company also has operations in the Caribbean region, Europe and Asia.
Sherwin runs its business under three broad heads − Paint Stores Group, Consumer Group and Global Finishes Group. The company’s key competitors include PPG Industries Inc. (PPG), The Valspar Corporation (VAL) and Air Products and Chemicals Inc. (APD).
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