This follows the company's announcement last week that it sold its largest portfolio company, Staffmark Holdings, to a Japanese company for $295 million.
The company, which raised $295 million last week by divesting its largest business, said it signed a credit agreement for a revolving credit facility totaling $290 million and a term loan facility in the amount of $225 million. The two facilities, led by TD Securities, BMO Capital Markets and SunTrust Robinson Humphrey, replace the company's previous revolving credit facility and term loan facility.
Under the terms of the five-year revolving credit facility, which is subject to borrowing base restrictions, amounts borrowed bear interest at LIBOR plus a margin ranging from 3 percent to 4 percent, based on a leverage ratio defined in the credit agreement.
Under the terms of the six-year term loan facility, amounts borrowed bear interest at LIBOR plus a margin of 6 percent. The term loan facility requires quarterly payments of approximately $0.56 million, with a final payment of the outstanding principal balance due October 2017.
The company utilized $75 million of the proceeds from the term debt facility to refinance existing indebtedness under its previous credit agreement. As a result, there are no initial borrowings outstanding under the revolving credit facility at closing. The company expects to utilize the remaining proceeds from the issuance of the term loan and future borrowings under the revolving credit facility to fund future expansion opportunities at its existing subsidiary companies, pursue new platform acquisition opportunities and provide for working capital and general corporate uses.
"We are very pleased to have completed this debt financing, which provides multiple benefits for our company," said Alan Offenberg, CODI's CEO. "First, it allows us to refinance our existing debt and extend our maturities to October 2016, in the case of our revolver, and to October 2017 for the new term loan. Second, it ensures attractive debt terms and pricing over the next several years. Finally, the financing expands our overall debt capacity and enables us to improve our mix of debt and equity capitalization, as we pursue organic and acquisition-related growth opportunities. We appreciate the support of all the financial institutions who participated in this transaction, many of which were also participants in our prior facility."