LeCroy Corp. has tapped Bank of New York to lead the $75 million credit facility backing its $81 million acquisition of Computer Access Technology Corp. (CATC). Bank of New York is the lead on the company's existing $25 million revolver, which will be replaced by the new credit. "We have had a relationship with Bank of New York for a long time. We brought them in to talk about the deal and they know our style isn't just to go with whoever is here," noted Tom Reslewic, LeCroy's ceo. "We shop. We pressed them pretty hard to give us a competitive deal and we are pretty confident that they did."
The company chose to use debt to finance the transaction over selling shares. LeCroy opted for $500,000 a quarter of interest expense verses 400 million shares of the company, which is 40%. "It's a no brainer," Reslewic said. "We certainly wouldn't give up 40% of the company to acquire CATC. $500,000 a quarter is relatively easy. Debt is cheap and we're very cash generative."
The new credit, which comprises a $25 million revolver and $50 million term loan, is being offered at LIBOR plus 2 3/4%. The spread is slightly larger than on the previous facility because the bank is taking on more risk with the term loan, explained Scott Kantor, LeCroy's cfo. "It's still really competitive," he added. Syndication is expected within the next 30-45 days, Reslewic noted. Bank of New York bankers did not return calls. LeCroy designs and manufactures oscilloscopes and serial data analyzers.