Stratos Global Corp. chose Royal Bank of Canada and Bank of America to lead its refinancing, replacing a previous credit led by several Canadian institutions. The agents on the previous credit were reportedly Royal Bank of Canada, Bank of Nova Scotia and CIBC World Markets.
"As we have expanded globally and we have increased our presence here in the U.S. and our business with the U.S. government and military, we thought it was important to bring a U.S. bank on board," explained Doug Gunster, Stratos' communications manager. "The largest portion of our revenues are generated in the U.S.," he added. The company's corporate headquarters are in Bethesda, Md., and its registered office is in St. Johns, Newfoundland, Canada.
The new credit comprises a $25 million revolver and $125 million "B" loan. "We are refinancing just to get some added flexibility in terms of how we can create value for our shareholders going forward and obviously to take advantage of the attractive interest rates at the moment," Gunster said. He declined to comment on the spread on the new credit but said the previous loan had a 6.7% effective interest rate for the nine months ended Sept. 30.
Another reason for the refi is that the company's current bank facility expires at the end of 2005. "The new loan is a six-year loan and it has very little amortization during the first five years, so it's a true six-year loan and that's advantageous for us--we don't have to pay back as much of the principal in the first years of the loan," Gunster noted.