When COMSYS IT Partners amended its credit facility, it not only received an extra $32.9 million of financing, but it also drastically cut pricing to save millions. The IT staffing and managed solutions company completed the amended $155 million credit facility led by Merrill Lynch earlier this month.
The new facility increased the company's first-lien revolver by $25 million to $145 million and increased the first-lien term loan to $10 million from $2.1 million. "We chose to increase the facility to pay down a second-lien term loan that had a much higher interest rate," said Joseph Tusa, cfo. Houston, Texas-based COMSYS will use $70 million of the new facility to pay down part of an existing $100 million second lien. Amendments to the facility also included a provision allowing the remaining $30 million of the second lien to be paid down without penalty by proceeds from a $40 million planned stock offering expected to be completed by the end of the year, according to filings with the Securities and Exchange Commission.
Although COMSYS will incur a charge of approximately $2.6 million for early pre-payment of the second-lien facility, the cost doesn't outweigh the benefit. "The new credit facility is at a substantially lower interest rate it would save [the company] approximately $3.5 million annually," he said. Tusa would not comment on exactly what pricing was or currently is on the facilities, though.