PanAmSat Corp. tapped its bank group for a repricing and combined its term loans under one new $650 million "B1" term loan, explained Kevin Watson, v.p. and treasurer. Watson said the company had considered coming to the market to reprice the loans in July, when the loan market experienced a surge in demand. But, "The window closed pretty quickly at that time," he explained "We didn't have the ability to get there." PanAmSat continued to monitor the market, however, and when it observed another period of strong demand, the company went after its credit revamping.
Prior to the recent tweaks, PanAmSat had a $455 million "B" piece and a $195 million "A" tranche. The "B" loan was priced at LIBOR plus 31/2%. The "A" piece was tied to a leveraged-based grid and carried a spread over LIBOR of 23/4%. The new loan is priced at LIBOR plus 21/2%, and is not linked to any grid. "It was a major success," said Watson. PanAmSat also has a $250 million undrawn revolver. The revolver is also priced on a grid tied to leverage at LIBOR plus 23/4%.
In addition to the revamped pricing and structure, PanAmSat was able to receive more flexibility through its operational covenants and a reduced amortization burden. The new credit extends the maturities on the loan out until September 2010. Credit Suisse First Boston led the credit revamping. Watson explained that the company believed CSFB would be the most effective as the bank held the lead role on the company's existing facility. CSFB was chosen to be the company's lead bank due to its knowledge of the industry and value-added expertise, noted Watson.