Imagistics International, formerly Pitney Bowes Office Systems, has amended its $225 million credit facility to reduce pricing and increase its share repurchase limits. The motivation behind the amendment is primarily to reduce the interest rate, explained Charles Wessendorf, v.p. of investor relations. "The credit metrics have improved measurably and, based on performance, Imagistics warrants the new interest rate," he said.
The margin on the $100 million "B" loan has been reduced 3/4% to LIBOR plus 23/ 4%, which is the same as the spread on the $125 million revolver. The credit was put in place last year to back Imagistics' spin-off from Pitney Bowes (LMW, 8/5/01). Fleet Capital and Merrill Lynch lead the facility.
Since going public in December, free cash flow has been used to both pay down debt and buy back shares, Wessendorf noted. Strong free cash flow in the last quarter enabled total debt to be reduced by a further $17 million to $83 million and allowed Imagistics to repurchase $12.4 million of stock, he said. The new amendment enables Imagistics to increase stock repurchases from $30 million to $58 million, he noted, adding that board approval is still required.
Strong free cash flow is being driven by improved receivables performance and strong results, Wessendorf stated. The Trumbull, Conn., company sells, rents, and services copiers and fax machines and is executing a strategy of expanding its large national account presence.