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| Craig Hubbard |
SCP Pool Corp. benefited from strong market conditions when it replaced its three-year, $110 million revolver with a new five-year, $120 million revolver led by Wachovia Bank. The loan has extended maturities, better pricing and additional flexibility, said Craig Hubbard, SCP's treasurer, who added that the prior credit was set to expire at the end of this year. "We basically just had an opportune time to enter and redo our credit facility when the market terms were favorable," he noted.
The new revolver is unsecured and allows the company to borrow up to three times debt-to-EBITDA. The previous facility was secured and limited the borrowings to two times. Debt-to-EBITDA of less than one turn and an expected cash flow in excess of $350 million over the next five years allowed SCP to obtain better pricing, Hubbard noted.
Bank One led the previous facility, but SCP chose Wachovia when the bank offered a better deal to the swimming pool distributor. "To be quite honest, Wachovia, Bank One and J.P. Morgan were fairly even. It's just that Wachovia had a little bit better pricing," Hubbard noted.
J.P. Morgan is syndication agent for the new credit while Hibernia National Bank and Wells Fargo Bank act as co-documentation agents. Regions Bank is the fifth member of the facility. The number of lenders in the syndicate stayed unchanged, after BNP Paribas and Fifth Third Bank dropped out of the new deal.
Hubbard said the decision to increase the size of the revolver is related to the growth needs of the business. SCP's sales have grown 10% per year since the old facility was implemented in November 2001. Hubbard said SCP needed more flexibility to fund working capital and to buy back shares if the company's stock price weakens. He also noted that SCP needed more liquidity for a dividend payment program started this year and "some dry powder for acquisitions."