WESCO's Asset-Backed Deal Offers Flexibility
WESCO International's recently refinanced revolver offers the company greater operational flexibility in its covenants and new long-term financing. The company was able to negotiate more flexible covenants because the new $290 million, five-year revolver is asset-based. "We were looking for longer maturity, increased liquidity, and we wanted to be able to take advantage of the assets that we have, said Dan Brailer, treasurer and secretary for WESCO, adding, "We could do that at essentially the same price. It made a lot of sense." Brailer would not disclose the exact pricing, but said it is comparable to the old.
The company was proactive in seeking the new financing. "We approached the market and concluded that it was appropriate to go out and look," said Brailer. The company was originally seeking a $250 million revolver but increased the amount when it found more demand, he explained. The credit was done on a best-efforts basis.
Brailer could not disclose the identities of its banks without their permission. He did, however, note that the lead changed on the new credit and that the bank group decreased to seven lenders from more than 15. The company does not have one relationship bank rather choosing to spread its business to multiple banks. "We have been very diligent in spreading fee based business to lenders and will continue to do that," Brailer said. The former $258 million, five-year revolver was set to mature in 2004.