NCO Group has doubled its borrowing capacity with an amended and restated $300 million revolver that has a $100 million accordion feature. NCO, a Horsham, Pa.-based business process outsourcing provider that manages accounts receivable collection, needed to put in place a new bank line before the previous one became current this quarter. But Steven Winokur, executive v.p. and cfo, said the current lending environment was also a factor in the timing. "We have a great loan market," he stated. RBS Securities was joint lead arranger and sole bookrunner for the facility.
In addition to the increase in capacity, the amendment also extends the maturity from March 2006 to June 2010. Pricing is also cheaper. The new line will cost LIBOR plus 75-150 basis points, depending on the company's debt-to-EBITDA ratio. This compares to LIBOR plus 225-300 on the previous bank line. This prior facility was put in place in 2003 and consisted of a $150 million term loan and a $50 million revolver. The term loan had just $31 million left. Explaining the choice of its lead bank, Winokur said NCO has been with Citizens Bank, which was bought by RBS in 1988. Citizens Bank is the administrative agent and National City Bank joined the facility as joint lead arranger and syndication agent. Bank of America and Wachovia Securities are serving as documentation agents.
The new facility also allows for $125 million to be used for the repayment of convertible notes if they are not converted into NCO common stock before their maturity on April 15. The 4 3/4% notes are convertible into NCO common stock at an exercise price of $32.92. As LMW went to press, the stock was quoted at $22.70.