Service Corp. International's new three-year, $200 million revolver gives the company more flexibility to pay dividends, repurchase stock and prepay debt, noted Phil Green, director of corporate finance for the funeral and cemetery services company.
The new revolver replaces a $185 million line. "When the previous facility was originally negotiated we had much more debt than we do now," Green said. "Given our leverage decrease over the last two years and our significant excess cash position we negotiated the ability to pay dividends and buy back stock." The new revolver is priced at LIBOR plus 1 3/4%, while the prior one closed out at LIBOR plus 2%.
The revolver is solely being used for letters of credit. "We can borrow under it, we just never had to under the old one and don't intend to under the new one," Green explained. The prior line was set to expire in June of next year and needed to be refinanced a year ahead of schedule because of letters of credit that mature. "If a letter of credit matured this month and the facility was set to expire 10 months from now, that would be a problem," Green noted.
J.P. Morgan and Banc of America Securities are the leads on the facility and led the previous one as well. Calyon, Southwest Bank of Texas and Merrill Lynch Capital are co-documentation agents. Other lenders include Hibernia National Bank, Lehman Commercial Paper, Sumitomo Mitsui Banking Corp., Union Planters Bank and Wachovia Securities.