Pacer International has completed the repricing of its $222 million term loan after being approached by agent bank Deutsche Bank , according to Lawrence Yarberry , Pacer's executive v.p. and cfo. The new pricing on the term loan will be LIBOR plus 2 3 / 4 %, a reduction of 1/2% that is equivalent to an annual interest expense reduction of $1.1 million. Despite investor concern over some of the deals in the market, Yarberry said the reprice has full investor support. "Our investors 100% approved the repricing," he said. "Everyone re-upped."
Yarberry believes a combination of the company's performance and market conditions led to the repricing. "I think it is a pretty hot market but our debt was trading at a premium, which indicated that our rate was higher than what the market was," he said. "Our strong cash flow and financial performance also allowed us to reprice the facility."
The facility, established in June, consists of a seven-year, $255 million term loan and a six-year, $75 million revolver. The repricing does not affect the undrawn revolver, which currently has $65.2 million available with $9.8 million in outstanding letters of credit. Since June, Pacer reported strong second and third quarter earnings, had strong cash flow and paid down a significant amount of the facility, Yarberry said. There are no changes to any of the loan covenants.