Société Générale last Monday launched syndication of a $135 million refinancing for Interstate Operating Co., a subsidiary of Interstate Hotels & Resorts. The new $60 million revolver and $75 million "B" loan refinances and expands the company's previous bank debt. "It lowers our cost of debt," said Bill Richardson, Interstate's cfo. He also said Intestate wanted more availability for growth purposes. Price talk on the new credit is LIBOR plus 3 1/2%, but this can go lower based on leverage, according to Richardson. Pro forma leverage will be 3.2 times.
The company's previous credit agreement comprised a $48 million revolver, $65 million term loan and $40 million subordinated term loan. The senior debt was priced on a grid ranging from LIBOR plus 3-4 1/2%, while the subordinated loan was more costly at LIBOR plus 8 1/2%, he added. SG was the previous lead on the senior debt, while Lehman Brothers led the subordinated term loan. Interstate is an independent hotel management company. SG bankers did not return calls.