RPC's recently announced, three-year growth plan presented it with a new challenge: tapping the bank loan market for a sizable credit facility. The oil field service and equipment company's growth plan includes a large increase in spending to increase capacity in its largest service lines and provide for geographic expansion in its current domestic service areas. A new $250 million revolver was needed to replace an existing $50 million revolver. "Borrowing money like this is new for us," said Ben Palmer, cfo. "We've never had debt historically."
RPC is going to spend $700 million between 2006 and 2008, a significant ramp up in the level of capital expenditures for the company, Palmer said. "Given our size and the cash flow, we needed a credit facility to fund what we wouldn't have with cash generated from operations," he said.
RPC turned to a syndicate of nine banks, including SunTrust Bank and Banc of America Securities to finance the five-year, $250 million revolving credit facility. "We approached a few banks and selected the leads. We went with the syndicate because it's a bigger line [of credit]," Palmer said. The existing $50 million facility was led by SunTrust. Palmer commented that pricing on the new facility was in the range of LIBOR plus 40 to 80 basis points, consistent with pricing on the smaller existing credit.
The other banks involved include: Wachovia Bank, Branch Banking and Trust Co., Regions Bank, Wells Fargo, Comerica Bank, Fifth Third Bank and Mercantile-Safe Deposit & Trust Co., according to a filing with the Securities and Exchange Commission. "It was a pretty painless process," he said. "Long term, it's a good strategy to have more banks to create relationships with in case we need to take out some more [loans]."