CapitalSource chose Wachovia Securities to lead its first unsecured credit facility because of the bank's long-standing relationship with the company and its good understanding of the business. The deal is a three-year, $545 million revolver, which is priced at LIBOR plus 1 1/8%.
"We know them well," said Thomas Fink, CapitalSource cfo, of Wachovia. "We have a good relationship with them. They have banked our company since its inception. Because this is our first unsecured facility, we felt they were in the best position to lead it."
Fink said the company is looking to broaden and diversify its funding platform. Increasing the amount of its unsecured debt is one way to do that, he said. It already has $700 million of secured credit facilities. "We're a growing financial services company and want to develop access to a number of markets, which is why we are expanding the amount of unsecured debt on our balance sheet," said Fink. He later added, "We believe having breadth and diversity in our funding sources will make the company even stronger."
CapitalSource approached Wachovia to do the financing. There are 11 banks in the syndicate, including two banks the company is using for the first time--Barclays Capital and Deutsche Bank. The company initially sought $400 million, but increased the facility size after receiving strong interest from banks willing to participate.