Navigant International is in the process of completing a major refinancing that includes a new $170 million senior secured credit facility and a $60 million private offering of 20-year convertible subordinated debentures. The credit, led by Bank of America, will comprise a four-year, $120 million revolver priced at LIBOR plus 31/4% and a $50 million, five-year term loan at LIBOR plus 31/2%. The company plans to use the proceeds from the offering along with borrowings under the new credit agreement to repay $80 million of senior secured notes that accrue interest at 9.84%.
"The timing was right. We had some high-interest secured notes outstanding," said Robert Griffith, cfo and chief operating officer of the travel management company. "It was a good time to refinance, repay those notes and reduce our interest expense." The interest rate on the debentures will be 47/8% and these will be convertible into shares of Navigant stock at an initial conversion rate of 60.4084 shares per $1000 principal amount of debentures, or $16.55 per share. Navigant's stock fell 11.5% to $13.33 on Nov. 3 when the refinancing was announced. "The stock price always seems to drop on convertible issue but our 90-day moving average is about $14 [and] we are at $13.70," said Griffith.
The company's stock is volatile, hitting a 52-week high of $15.90 on Oct. 28 and a 52-week low of $9.51 on Feb. 19. The fluctuation in the stock price has to do with the travel industry in general, according to Griffith. "This year we had Iraq that reduced travel and SARS that impacted travel as well," he said. "We remained a profitable company even in those downturns." The credit facility will become operational once existing notes are paid off and the debentures are completed. Navigant's previous loans and revolver are led by B of A as well. "They have done a good job in the past and we chose to use them again," Griffith said.