USI Holdings Corp. closed on a new $285 million credit March 24, that allowed it to increase its borrowing capacity and offer more flexibility. JPMorgan was the sole lead on the deal. "We did the new facility to one, increase our borrowing capacity; two, to give ourselves more financial and operating flexibility; and three, to take advantage of the fact our credit quality has probably improved and we were able to improve pricing as well," said Mike Voltaggio, associate v.p. in finance at USI.
Voltaggio said over the last few years, the insurance and financial products and services company has grown in size and set a track record of having a reasonable leverage ratio that the ratings agencies and lending market were comfortable with. At the end of 2005, he estimated the company's leverage was just under 2.3 times debt to EBITDA.
The initial facility put in place consisted of a $125 million term loan and a $30 million revolver. In January 2005, the company increased the term loan by $90 million and Voltaggio said that putting aside what had amortized, the company had about a $215 million term loan that was then amortized down to just over $210 million when it was refinanced.
The new facility consists of a $210 million term loan and a $75 million revolver, both of which mature in 2011. Pricing is based on a leverage ratio and Voltaggio estimated that it now stands at LIBOR plus 2 1/4%. The company has also restructured several financial covenants and other limitations as part of the new facility. He said the company increased the revolver to offer more flexibility and for acquisitions. He could not discuss any potential acquisitions.
JPMorgan has worked with the company since 2003 and has developed a strong relationship. "They brought us some good ideas and continue to be supportive of us," Voltaggio said.