Rexnord Corporation Completes Refinancing Improved Free Cash Flow And $0.25 To $0.30 Annual EPS Accretion

Rexnord Corporation (“Rexnord”) (NYSE:RXN) announced today that its wholly-owned subsidiaries, RBS Global, Inc. and Rexnord LLC (together, the “Borrowers”), entered into an amendment to their senior secured credit facilities providing for a new 7-year term loan (the “Refinancing Term Loan”) in an aggregate amount of approximately $1.95 billion, in addition to their existing $265 million revolving credit facility. The Refinancing Term Loan matures on August 21, 2020, and is subject to a leveraged-based pricing grid, with initial pricing of LIBOR (subject to a 1.00% floor) plus 3.00%. The proceeds of the Refinancing Term Loan were used to purchase, redeem or discharge all of the Borrowers’ outstanding 8½% Senior Notes due 2018 (the “Notes”), refinance the Borrowers’ previously existing senior secured term loan and pay related fees and expenses.

At prevailing interest rates and subject to a 1.00% LIBOR floor in the Refinancing Term Loan, Rexnord expects the refinancing will reduce annual pre-tax interest expense by approximately $41 million to $48 million depending on the timing and amount of any interest rate hedging strategies management may pursue. Although the Borrowers will not incur prepayment penalties as a result of the refinancing of the senior secured credit facilities, they will incur a pre-tax charge of approximately $130 million to $135 million during the second quarter of fiscal 2014 due to the prepayment premiums related to the Notes and non-cash write-off of debt issuance costs associated with the refinancing.

Todd A. Adams, President and Chief Executive Officer, commented, “We are pleased to have successfully completed our refinancing. The benefits of the transaction include a significant improvement in our free cash flow and $0.25 to $0.30 of annualized earnings per share accretion, as well as extending our debt maturity profile to 2020. We will update our fiscal 2014 outlook, inclusive of this transaction, when we announce our second quarter earnings.”

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