West Corp. has closed on a $325 million credit facility from Wachovia Bank to support the $400 million acquisition of InterCall from ITC Holding Company, stated Paul Mendlik, executive v.p., cfo and treasurer for West Corp. The new financing includes a $125 million revolver and a $200 million "A" term loan. West Corp. decided to tap the bank loan market for the acquisition financing because of the attractive interest rates, noted Mendlik. Additionally, loan financing matches the company's needs most appropriately as West Corp has a very strong balance sheet and strong cash flows available to service the debt on a fairly short repayment schedule, Mendlik added.
Prior to the acquisition, West Corp., a provider of outsourced communication solutions, had a $25 million credit that was priced at 1% under the prime rate. Mendlik said the company was able to get the low pricing due to its strong balance sheet with only $30 million of debt outstanding. This deal was a shared line of credit primarily through Wells Fargo Bank and First National Bank Omaha. The new credit has a four-year tenor and pricing is linked to a leverage-based grid, currently set at LIBOR plus 11/2%. "The major advantage is flexibility," said Mendlik, noting that the company still has a lot of available credit under the facility with only $250 million drawn at closing.
Mendlik said Wachovia formed a relationship with the company through some previous lease financing transactions. Wachovia was also a lender to ITC and approached West Corp. early on in the process about the financing. Wells Fargo, Bank of America and BNP Paribas also hold roles on the credit. All the banks that participated on the company's previous facility committed to the new deal. In total, the bank group comprises 17 banks.