EXHIBIT 10.20

 

SIXTH AMENDMENT

TO

REVOLVING CREDIT AGREEMENT

 

This SIXTH AMENDMENT TO REVOLVING CREDIT AGREEMENT is made and entered into as
of July 14, 2003 (this “Amendment”), among (a) CALIFORNIA STEEL INDUSTRIES,
INC., a Delaware corporation (the “Borrower”), (b) THE BANKS, (c) BANK OF
AMERICA, N.A., as loan and collateral agent for the Banks (in such capacity,
hereinafter the “Loan and Collateral Agent”), (d) BANK OF AMERICA, N.A., as
letter of credit agent for the Banks (in such capacity, hereinafter the “Letter
of Credit Agent”) and (e) BANK OF TOKYO-MITSUBISHI, LTD, as documentation agent.
Capitalized terms used but not defined in this Amendment shall have the same
meanings to such terms in the Credit Agreement defined below.

 

WHEREAS, the Borrower, the Banks, the Loan and Collateral Agent, the Letter of
Credit Agent and the Arrangers have entered into that certain Revolving Credit
Agreement, dated as of March 10, 1999 (as amended, restated, supplemented or
otherwise modified and in effect from time to time, the “Credit Agreement”)
pursuant to which the Banks have extended credit to the Borrower on the terms
set forth therein;

 

WHEREAS, the Borrower has requested that the Banks amend the Credit Agreement
upon the terms and subject to the conditions contained herein; and

 

WHEREAS, the Banks have agreed to amend the Credit Agreement upon the terms and
subject to the conditions contained herein;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1. Amendment to the Credit Agreement. Subject to satisfaction of the condition
set forth in §4 below, the Borrower, the Agents and the Banks hereby agree to
amend the Credit Agreement as set forth below.

 

1.1 Amendment to Definitions. Section 1.1 of the Credit Agreement is hereby
amended as follows:

 

(a) The definition of “Applicable Margin” is hereby amended by deleting the
chart contained therein and replacing it with the following:

 

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Level

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Leverage Ratio

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   Eurodollar Rate
Loans

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Base

Rate Loans

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    Commitment Fee

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  I    Less than or equal to 1.75:1.0    1.00 %   0.00 %   0.20 % II    Less
than or equal to 2.5:1.0 but greater than 1.75:1.0    1.25 %   0.00 %   0.20 %
III    Less than or equal to 3.5:1.0 but greater than 2.5:1.0    1.50 %   0.00 %
  0.25 % IV    Less than or equal to 4.5:1.0 but greater than 3.5:1.0    1.75 %
  0.00 %   0.40 % V    Greater than 4.5:1.0    2.00 %   0.50 %   0.50 %

 

(b) The definition of “Borrowing Base” is hereby amended by deleting clauses (a)
through (e) in their entirety and substituting in lieu thereof the following new
clauses:

 

“(a) 80% of Eligible Accounts Receivable for which invoices have been issued and
are payable; plus

 

(b) the lesser of (i) 50% of the Net Book Value of Eligible Inventory and (ii)
$80,000,000; minus

 

(c) Reserves; plus

 

(d) the Discretionary Amount.”

 

(c) The definition of “Consolidated Operating Cash Flow” is hereby amended by
deleting the phrase “(ii) the amount of Distributions made during such period,
plus (iii) income taxes” and substituting in lieu thereof the phrase “(ii) net
income taxes”.

 

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(d) The definition of “Consolidated Tangible Net Worth” is hereby amended by (i)
deleting the period (“.”) at the end of clause (d) and substituting in lieu
thereof the text “; plus” and (ii) adding the following new clause (e):

 

“(e) the value of the Investment of the Borrowers and its Subsidiaries in any of
its Affiliates (other than Companhia Siderurgica de Tubarao).”

 

(e) The definition of “Revolving Credit Loan Maturity Date” is hereby amended by
deleting the date “March 10, 2004” and substituting in lieu thereof the date
“June 30, 2006”.

 

(f) The following definition is added to §1.1 and inserted in correct
alphabetical order:

 

“Documentation Agent. Bank of Tokyo-Mitsubishi. The Documentation Agent shall
have no rights, duties, obligations or responsibilities beyond those of a Bank.”

 

1.2 Amendment to Commitment Fee. Section 2.2 of the Credit Agreement is hereby
amended by deleting the following proviso in the first sentence of such section:

 

“provided, however, that notwithstanding the foregoing, the commitment fee shall
be calculated with an Applicable Margin of 0.50% if during any quarter the
average daily Revolving Credit Loans outstanding plus the average Maximum
Drawing Amount and all Unpaid Reimbursement Obligations during such quarter is
less than (i) $50,000,000, if the average Total Commitment during such quarter
is more than $100,000,000, and (ii) $40,000,000, if the average Total Commitment
during such quarter is $100,000,000 or less.”

 

1.3 Amendment to Distribution Restriction. Section 9.4 of the Credit Agreement
is hereby deleted in its entirety and replaced by the following:

 

“9.4 Distributions. The Borrower will not make any Distributions; provided,
however, so long as no Default or Event of Default exists or would result
therefrom, the Borrower may (a) make semi-annual Distributions not to exceed 50%
of the Consolidated Net Income of the Borrower for the prior fiscal quarters for
which full Distribution has not already been made so long as (i) such
Distributions are made after delivery to the Banks of the financial statements
required by Sections 8.4(a) and 8.4(b), (ii) the Borrower has delivered
calculations to the Agents, demonstrating in a format satisfactory to the

 

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Agents that (A) the making of such Distributions will not cause a Default or
Event of Default on a projected basis for the next two fiscal quarters of the
Borrower, (B) the ratio of (y) Consolidated Operating Cash Flow, minus the
aggregate amount of such Distributions, for the four fiscal quarters most
recently ended to (z) Consolidated Total Debt Service for such period is not
less than 1.00:1.00 and (C) during the 30 days prior to the making of such
Distributions and immediately thereafter, the lesser of the Borrowing Base and
the Total Commitment shall exceed the sum of Revolving Credit Loans, the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations by not less than
$10,000,000, and (iii) prior to making such Distributions the Borrower has paid
its trade payables in the ordinary course and not altered such procedures in
order to comply with the provisions of the previous part (ii)(C) above, and (b)
make Distributions to the preferred stockholders of the Borrower not to exceed
$3,000,000 per year.

 

Any amounts paid in connection with acquisitions permitted under §9.5.1(d)
during any fiscal quarter shall be excluded from the calculation of Consolidated
Operating Cash Flow in (y) above for such fiscal quarter.”

 

1.4 Amendment to Mergers and Acquisitions Restrictions. Section 9.5.1 of the
Credit Agreement is hereby amended by (a) deleting the text “(d)” and
substituting in lieu thereof the text “(e)” and (b) inserting immediately
following the phrase “(c) the merger or consolidation of two or more
Subsidiaries of the Borrower;” the following text:

 

“(d) the acquisition of all or any portion of any property subject to the #2
Continuous Galvanizing Line Lease Agreement, dated September 30, 1998, between
the Borrower and State Street Bank and Trust Company of California, so long as
(i) the aggregate purchase price paid by the Borrower or its Subsidiaries shall
not exceed $19,500,000, (ii) prior to and after giving effect to such
acquisition there shall be no Default or Event of Default, (iii) the Borrower
has delivered to the Agents not less than 5 Business Days prior notice of such
proposed acquisition accompanied by calculations demonstrating in a format
satisfactory to the Agents that (A) the consummation of such acquisition will
not cause a Default or Event of Default on a projected basis for the next two
fiscal quarters of the Borrower and (B) during the 30 days prior to the making
of such acquisition and immediately thereafter, the lesser of the Borrowing Base
and the Total Commitment shall exceed the sum of Revolving Credit Loans, the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations by not less than
$25,000,000, and (iv) such acquisition is otherwise permitted under this
Agreement.”

 

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1.5 Amendment to Permitted IBJ Debt, Permitted Refinancing Indebtedness and
Indebtedness to DKB Nederland. Section 9.8 of the Credit Agreement is hereby
amended by inserting immediately before the period (“.”) at the end thereof the
following:

 

; provided, that the Borrower may prepay, redeem or repurchase the Permitted
Refinancing Indebtedness so long as (a) the amount of such prepayment,
redemption or repurchase shall not exceed $50,000,000 in the aggregate, (b)
prior to and after giving effect to such prepayment, redemption or repurchase,
there shall be no Default or Event of Default, (c) the Borrower has delivered to
the Agents not less than 5 Business Days prior notice of such proposed
prepayment, redemption or repurchase accompanied by calculations demonstrating
in a format satisfactory to the Agents that (i) the making of such prepayment,
redemption or repurchase will not cause a Default or Event of Default on a
projected basis for the next two fiscal quarters of the Borrower and (ii) during
the 30 days prior to the making of such prepayment, redemption or repurchase and
immediately thereafter, the lesser of the Borrowing Base and the Total
Commitment shall exceed the sum of Revolving Credit Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations by not less than $25,000,000,
and (d) such prepayment, redemption or repurchase is otherwise permitted under
the Indenture dated as of April 6, 1999 by and between the Borrower and State
Street Bank and Trust Company of California, N.A.”

 

1.6 Amendment to Capital Expenditures Financial Covenant. Section 10.1 of the
Credit Agreement is hereby amended by deleting the phrase “and (d) $40,000,000
for each fiscal year thereafter;” and substituting in lieu thereof the
following:

 

“, (d) $40,000,000 for each of the Borrower’s 2002, 2003 and 2004 fiscal years,
(e) $50,000,000 for the Borrower’s 2005 fiscal year and (f) $40,000,000 for each
fiscal year thereafter;”

 

1.7 Amendment to Consolidated Tangible Net Worth Financial Covenant. Section
10.2 of the Credit Agreement is hereby deleted in its entirety and replaced with
the following:

 

“10.2. Consolidated Tangible Net Worth. The Borrower will not permit
Consolidated Tangible Net Worth to be less than the sum of (a) $195,000,000,
minus (b) $3,000,000, plus (c) on a cumulative basis, 50% of positive
Consolidated Net Income for each fiscal year commencing with the fiscal year
ending December 31, 2003, plus (d) the

 

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proceeds received by the Borrower in connection with the sale of equity
securities of the Borrower or its Subsidiaries.”

 

1.8 Amendment to Fixed Charge Coverage. Section 10.3 of the Credit Agreement is
hereby amended by adding the following sentence to the end thereof:

 

“Any amounts paid in connection with acquisitions permitted under §9.5.1(d)
hereof during any fiscal quarter shall be excluded from Consolidated Operating
Cash Flow for such fiscal quarter for purposes of calculating the Fixed Charge
Coverage Ratio under this §10.3.”

 

2. Replacement of Schedule 1 to the Credit Agreement. Schedule 1 to the Credit
Agreement is hereby deleted in its entirety, and the Schedule 1 attached hereto
is hereby substituted in lieu thereof.

 

3. Representation and Warranties. The Borrower hereby represents and warrants to
each of the Banks and the Agents as follows:

 

(a) Representations and Warranties in Credit Agreement. Each of the
representations and warranties of the Borrower contained in the Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with the Credit Agreement (i) were true and correct
when made and (ii) after giving effect to this Amendment, continue to be true
and correct on the date hereof (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement and the other
Loan Documents, as amended hereby, and changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse, and to
the extent that such representations and warranties relate expressly to an
earlier date).

 

(b) Authority. The execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of its agreements and obligations under this
Amendment (i) are within its corporate authority (ii) have been duly authorized
by all necessary proceedings, (iii) do not and will not conflict with or result
in any breach or contravention or any provision of law, statute, rule or
regulation to which the Borrower is subject or any judgment, order, writ,
injunction, license or permit applicable to the Borrower so as to materially
adversely affect the assets, business or any activity of the Borrower, (iv) do
not conflict with any provision of the corporate charter or bylaws of the
Borrower or any agreement or other instrument binding upon them, (v) require any
waivers, consents or approvals by any of its creditors which have not been
obtained, or (vi) require any approval which has not been obtained.

 

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(c) Enforceability of Obligations. This Amendment and the Credit Agreement, as
amended hereby, constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights and except to the extent that availability of
the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.

 

4. Condition to Effectiveness. This Amendment (other than Section 1.2 hereof)
shall become effective as of June 30, 2003, and Section 1.2 hereof shall become
effective as of April 1, 2003, subject to satisfaction of each of the following
condition precedent:

 

(a) Execution and Delivery of Amendment. This Amendment shall have been executed
and delivered to the Loan and Collateral Agent by each of the Borrower, the
Banks and the Agents.

 

(b) Representations and Warranties. The representations and warranties set forth
in §3 hereof are true and correct on and as of the date hereof.

 

(c) Corporate Documents and Board Resolutions. The Loan and Collateral Agent
shall have received from a duly authorized officer of the Borrower a copy,
certified by such officer to be true and complete as of the date hereof, of each
of (i) its charter or other incorporation documents as in effect on such date of
certification, (ii) its by-laws as in effect on such date, and (iii) the
resolutions of its Board of Directors authorizing the Borrower to enter into and
carry out the terms of this Amendment and the Credit Agreement, as amended
hereby, all in form and substance satisfactory to the Loan and Collateral Agent.

 

(d) No Default or Event of Default. No Default or Event of Default shall have
occurred and shall be continuing.

 

(e) Amendment Fee. The Borrower shall have paid to the Loan and Collateral Agent
for the pro rata account of the Banks, an amendment fee in the amount equal to
twenty-five (25) basis points of the Total Commitment.

 

(f) Structuring and Arrangement Fee. The Borrower shall have paid to the Loan
and Collateral Agent for its own account the structuring and arrangement fee set
forth in the Fee Letter dated July     , 2003.

 

5. Affirmation and Acknowledgment of the Borrower. The Borrower hereby ratifies
and confirms all of its Obligations to the Banks and the Borrower hereby affirms
its absolute and unconditional

 

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promise to pay to the Banks the Revolving Credit Loans and all other amounts due
under the Credit Agreement, as amended hereby.

 

6. Miscellaneous Provisions. From and after the date hereof, this Amendment
shall be deemed a Loan Document for all purposes of the Credit Agreement and the
other Loan Documents and each reference to Loan Documents in the Credit
Agreement and the other Loan Documents shall be deemed to include this
Amendment. Any breach by the Borrower of the covenants and obligations of the
Borrower contained herein shall be an immediate Event of Default. Except as
expressly provided herein, this Amendment shall not, by implication or
otherwise, limit, impair, constitute a waiver of or otherwise affect any rights
or remedies of the Loan and Collateral Agent or the Banks under the Credit
Agreement or the other Loan Documents, nor alter, modify, amend or in any way
affect any of the obligations or covenants contained in the Credit Agreement or
any of the other Loan Documents, all of which are ratified and confirmed in all
respects and shall continue in full force and effect. This Amendment may be
executed in any number of counterparts, but all of such counterparts shall
together constitute but one and the same agreement. Delivery of an executed
counterpart of a signature page by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Amendment. In making proof
of this Amendment, it shall not be necessary to produce or account for more than
one such counterpart.

 

7. Applicable Law. THIS AMENDMENT IS INTENDED TO TAKE EFFECT AS AN AGREEMENT
UNDER SEAL AND SHALL BE CONSTRUED ACCORDING TO AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

 

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IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as a
sealed instrument as of the date first set forth above.

 

CALIFORNIA STEEL INDUSTRIES, INC. By:   /s/    VICENTE WRIGHT            

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Name:

  Vicente Wright

Title:

  President and CEO

 

BANK OF AMERICA, N.A., as Loan and Collateral Agent By:   /s/    KEN
PURO            

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Name:

  Ken Puro

Title:

  Vice President

 

BANK OF AMERICA, N.A., as a Bank and Letter of Credit Agent By:   /s/    JAMIE
FREEMAN            

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Name:

  Jamie Freeman

Title:

  VP

 

Wells Fargo Bank, N.A. By:   /s/    ANTHONY D. TURNER            

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Name:

  Anthony D. Turner

Title:

  Vice President

 

Bank Of Tokyo-mitsubishi, Ltd. By:   /s/    HIROSHI JINZA            

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Name:

  Hiroshi Jinza

Title:

  Deputy General Manager

 

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MIZUHO CORPORATE BANK, LTD., (as

successor in interest to The Industrial Bank of

Japan, Limited)

By:   /s/    SHINJI YAMADA            

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Name:

  Shinji Yamada

Title:

  Joint General Manager

 

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SCHEDULE 1

 

BANKS; COMMITMENT PERCENTAGES; ADDRESSES

 

Bank

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   Commitment

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   Commitment
Percentage

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BANK OF AMERICA, N.A.

   $ 33,846,153.85    30.769230769 %

Notices (other than Loan Requests):

800 Fifth Avenue, Floor 37

Seattle, WA 98104

Mail Code: WA1-501-37-20

Attention: Ken Puro, Vice President

Tel: (206) 358-0138

Fax: (206) 358-0971

E-Mail: ken.puro@bankofamerica.com

 

Loan Requests:

1850 Gateway Boulevard

Concord, CA 94520

Mail Code: CA4-706-05-09

Attention: Chanita Stevenson

Tel: (925) 675-8401

Fax: (888) 969-9148

E-Mail: chanita.stevenson@bankofamerica.com

             

BANK OF TOKYO-MITSUBISHI

   $ 29,615,384.62    26.923076923 %

Los Angeles Branch

777 South Figueroa Street, Suite 600

Los Angeles, CA 90017

Attention: Yoto Kitagawa, Assistant Vice President

Tel: (213) 488-3758

Fax: (213_ 488-3875

E-mail: ykitagawa@btmna.com

             

WELLS FARGO BANK, N.A.

   $ 25,384,615.38    23.076923077 %

Los Angeles Regional Commercial Banking Office

333 S. Grand Avenue, 3rd Floor

Los Angeles, CA 90071

Attention: Anthony Turner, Vice President

Tel: (213) 253-6226

Fax: (213) 687-3501

E-Mail: turnerad@wellsfargo.com

             

 

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MIZUHO CORPORATE BANK, LTD (as successor in interest to The Industrial Bank of
Japan, Limited)

   $ 21,153,846.15    19.230769231 %

Los Angeles Agency

350 South Grand Avenue, Suite 1500

Los Angeles, CA 90071

Attention: Yuka Giles, Vice President

Tel: (213) 243-4622

Fax: (213) 253-4197

E-mail: Yuka.Giles@mizuhocbus.com

             

TOTAL:

   $ 110,000,000    100 %