Veritas DGC has closed on a $250 million credit after tweaking the deal to appease investors. During the seismic data provider's three-month stint in syndication, the facility faced a difficult lending environment for companies in the energy sector, explained Matt Fitzgerald, Veritas' cfo. "Pricing was a bit higher than we initially thought it would be," he said. Tranches reached rates as high as LIBOR plus 71/2% after launching in the LIBOR plus 21/4-31/ 2% range (LMW, 11/4). He noted that the final pricing still reduced the Houston-based company's borrowing cost compared to its notes priced at 93/4%, which are scheduled to be redeemed today.
The facility refinanced the notes as well as a $100 million revolver due this August. This Wells Fargo Bank-led revolver was priced from LIBOR plus 2-3%, Fitzgerald stated. The size and tranche structure shifted and reduced while lead banks Deutsche Bank and Wells Fargo shopped the deal (LMW, 2/3). The originally proposed credit included a $200 million "B" piece priced at LIBOR plus 31/2% with a 1/4% upfront fee and a $75 million revolver priced on a grid ranging from 21/4-3% over LIBOR. The credit ended up with a three-year, $55 million revolver priced on a leverage-based grid ranging from LIBOR plus 31/2-4%. A three-year, $30 million "A" loan priced at LIBOR plus 4% and a four-year, $125 million "B" piece priced at LIBOR plus 5%, with a 2% LIBOR floor. A five-year, $40 million second priority lien "C" piece, provided completely by Ableco Finance, also priced at LIBOR plus 71/2% with a 3% LIBOR floor. Call protection at 102 was added to the credit for the first year and 101 for the second year.
Deutsche Bank led all of the term debt, while Wells Fargo handled the revolver, Fitzgerald said. Deutsche Bank was a new lead bank for Veritas. Fitzgerald said the company had a past relationship with the lender after Deutsche Bank made a proposal to lead the financing for a failed merger with Norway-based Petroleum Geo-Services. The company now has $195 million total outstanding debt with the revolver expected to remain undrawn. Veritas' debt-to-EBITDA multiples are at three times.