Weir refinances $1.2bn, says mining business resilient
By Sean Farrell
Date: Friday 26 Jun 2020
(Sharecast News) - Weir Group said it refinanced almost $1.2bn of main banking facilities at a slightly higher cost and that its mining markets were resilient during the Covid-19 crisis.
The FTSE 250 engineer extended the maturity on a $950m revolving credit facility to June 2023 with a two-year extension option. It also arranged a new £200m ($248m) term loan maturing in March 2022. The package replaces existing facilities that matured on or before September 2021.
"The margin on the new facilities is slightly higher than current levels reflecting market conditions but remains highly competitive and significantly lower than the group's existing long-term bonds," Weir said.
Weir provides pumps, valves and tools for industrial use, focusing on mining, aggregates and oil and gas. The company said mining markets had held up well during Covid-19 disruption but that oil and gas demand in North America was hit harder.
In the second quarter minerals aftermarket and original equipment orders were similar to the first quarter with gold project orders offsetting delays across other commodities.
Demand for core mining tools at the US Esco business, bought two years ago, was resilient but it has been affected by reduced iron ore activity. Esco's infrastructure markets have been affected by construction shutdowns. North American oil and gas activity reduced significantly in the second quarter but Weir's oil and gas business will generate cash for the full year.
"The group continues to be highly cash generative and its strong liquidity position includes c£500m of immediately available committed facilities and cash balances, now with an extended maturity profile," Weir said.
Weir shares rose3.7% to £10.71.50p at 08:16 BST. The shares have fallen 30% in 2020 but have jumped since hitting a 10-year low of 666p at the end of March.
Weir withdrew guidance on 26 March when it scrapped its dividend in the early stages of the Covid-19 crisis. The company said it would reintroduce guidance when it has enough confidence about the outlook for the rest of the year.
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