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O-I secures $2bn credit to refinance debt

US-based glass container manufacturer Owens-Illinois (O-I) has secured a $2bn credit to refinance debt dating back to 2006.

O-I said the new agreement, which has a maturity date of May 2016, is comprised of $1.1bn in term loans and a $900m revolving credit facility.

The company said the proceeds from borrowings under the new credit agreement will be used to repay all amounts outstanding under, and terminate, the company’s 2006 Credit Agreement, which will mature in June 2012.

O-I also has plans to use proceeds from the new credit agreement to fund the redemption of $400m in 6.75% senior notes due in 2014.

The firm estimates that full-year 2011 net interest expense will be $280m, excluding the impact of redemption premiums and the write-off of finance fees.

O-I vice president and chief financial officer Ed White said the current favourable credit market presented an ideal opportunity to refinance our bank credit agreement. The attractive pricing under the new agreement will allow us to reduce interest expense as we redeem a portion of our more expensive fixed rate bonds.