JPMorgan and Lehman Brothers launched a $540 million credit facility last Wednesday for VeriFone to fund its approximately $793 million acquisition of Lipman Electronic Engineering. The deal consists of a six-year, $40 million revolver and a seven-year, $500 million term loan. Pricing is LIBOR plus 2% on both tranches, according to a banker.
Moody's Investors Service rated the facility B1 and revised the company's outlook to stable from negative. One investor suggested that pricing was probably a little too tight for the rating in this type of sector. The recently launched $465 million Open Text deal was rated one notch higher at Ba3 by Moody's and was priced at LIBOR plus 2 1/2%. That deal, which launched in early September, was well oversubscribed and Royal Bank of Canada instituted a pricing step down to LIBOR plus 2 1/4% when leverage falls below 2.75 times or the corporate credit rating rises to BB-/Ba3, according to a banker. Open Text's current corporate family rating is B1 and debt leverage is currently 3.6 times, but Moody's expected it to drop within the next 12 to 18 months (CIN, 9/15). Debt to EBITDA leverage is 3.1 times for the VeriFone credit, according to Moody's.
VeriFone tapped Bank of America and Credit Suisse in June 2004 for a $292 million credit facility, according to a filing with the Securities and Exchange Commission. It was amended in March 2005, cutting pricing on the $190 million term loan "B" 50 basis points to LIBOR plus 2%. VeriFone is a point-of-sale payment solutions provider. Lipman is an Israel-based electronic payment provider. A VeriFone spokeswoman did not respond to emails seeking comment.