Information technology services company COMSYS IT Partners lowered its borrowing costs by paying off the rest of its costly second-lien debt. The company expanded its revolver to eliminate the loan and by doing so, avoided having to sell new equity. David Kerr, senior v.p. responsible for financing activities at COMSYS, said the company approached lead bank Merrill Lynch to amend its credit facility. "We're happy with how it went. We've been doing business with Merrill for years. It is a good and fair relationship," said Kerr.
COMSYS paid off the remaining $30 million of its second lien priced at LIBOR plus 7 1/2% by expanding its revolver by $15 million to $160 million. It also reduced pricing on the revolver to LIBOR plus 2% from LIBOR plus 2 1/2% and took 100 basis points off its $10 million first lien cutting pricing to LIBOR plus 2%.
COMSYS started paying down the second lien in September when it redeemed $70 million of the loan by increasing its revolver by $25 million to $145 million and its first lien to $10 million from $2.1 million (CIN, 9/22). At the time, it planned to take down the rest of the second lien with a stock offering, but was able to avoid this by expanding its revolver. Kerr said his company wants to maintain the facilities as they are, but would not rule out taking on second-lien debt again in the future.