Lamar Taps Incremental Facility
Lamar Media has drawn down $200 million from an incremental facility instead of its $350 million revolver to take advantage of the option while it was still available. The provision for the incremental facility, written into an original $1.4 billion credit facility, affords the company access to a total of $400 million at the discretion of the bank group. The company wanted to secure $200 million of the incremental facility now because it could not be guaranteed access to the funds later, explained Keith Istre, cfo of Lamar. He declined to be specific about why the line may not be available to the company in the future. The company will use the $200 million to support current and future acquisitions.
The incremental facility has a higher spread than the revolver -- LIBOR plus 21/ 2% compared to LIBOR plus 13/ 4% -- but Istre said the increase in price "is not a significant amount." Lamar used $140 million of the $200 million to pay down the outstanding amount on its revolver, and $30 million to fund its acquisitions in January. The remaining $30 million was placed in an interest-bearing account to be used for future acquisitions.
J.P. Morgan leads the facility, which closed on June 15, 1999. "We have a long-term relationship," said Istre of the company and the bank. He noted that J.P. Morgan has been Lamar's relationship agent since 1983, when it was Chase Manhattan Bank. "They were big and they understood the business when other people didn't," said Istre, explaining why Lamar chose Chase 19 years ago. Other members of the 60 bank syndicate include BANK ONE, FleetBoston Financial, Wachovia Bank, Bank of America, SunTrust, and Union of Bank of California.
The $1.4 billion credit facility comprises a $350 million revolver and a $450 term loan "A," both priced at LIBOR plus 13/ 4% on a grid tied to leverage; a $200 million term loan "B" at a fixed price of LIBOR plus 21/ 4%; and the $400 million incremental facility. A spokesperson for J.P. Morgan declined to comment on the deal.