An "excellent" interest-rate environment led The First American Corp. to return to the loan market and replace its credit facility with a larger and better-priced revolver, said Will Ergas, First American's treasurer. The $500 million revolver is priced at LIBOR plus 5/8% and is led by J.P. Morgan. The new facility replaces a $200 million revolver, which was set to expire in 2006 that was priced at LIBOR plus 1/2%.
The timing behind the transaction had to do with the availability of the funds and rates. "Short terms rates are going to increase in the near future and we believed it was the right time to do it," Ergas noted. He said First American preempted the maturity of the old facility and increased the amount. Adding to the revolver capacity gives the data provider additional flexibility, he said. The new revolver will be used for general operational needs and to take advantage of the opportunities in the market, Ergas said. This could include acquisitions, but First American has no immediate plans to draw it down, he noted.
J.P. Morgan also led the data provider's previous revolver. "Over the last 12 or 13 years we have used J.P. Morgan as the lead. They understand our business and have a great reputation in the marketplace," Ergas said. Comerica Bank, Union Bank of California, U.S. Bank and Wells Fargo Bank were syndication agents.
A total of 10 banks participated in the syndicate and no new banks were added. According to the credit agreement, Sumitomo Mitsui Banking Corp., Bank of The West, KeyBank, Bank of America and LaSalle Bank are the other members of the syndicate. Commitments range from $65 million for J.P. Morgan, $60 million for the syndication agents, through to $25 million for LaSalle.