Affiliated Computer Services (ACS) has obtained an $875 million senior unsecured revolver in order to pay off and refinance existing debt, according to Nancy Vineyard, treasurer. The new credit line repaid a $375 million bridge loan backing the company's $400 million acquisition of AFSA Data Corp. last June and refinanced its existing $450 million revolver, Vineyard said. ACS set a minimum target of $700 million for the deal, but it took an $875 million credit due to strong demand during syndication, she explained. Vineyard noted that there is still a $25 million accordion feature in place to raise the line to $900 million if needed.
Pricing on the 39-month revolver is tied to a ratings-based grid. Given its current rating of Baa1, pricing for the first six months of the line's tenor is set at LIBOR plus 87.5 basis points, Vineyard noted. This rate includes a facility fee of 17.5 basis points and a utilization fee of 12.5 basis points. After the first six months, the utilization fee will only kick in if ACS draws down more than 50% of the facility.
Wells Fargo and J.P. Morgan co-lead the credit, the syndication of which was launched in August. "We've been with Wells Fargo since the mid-90s, and they've been able to be flexible enough in our endeavors," Vineyard said, adding that ACS has a similar relationship with J.P. Morgan. Bank One, Key Bank, Bank of Tokyo-Mitsubishi and Wachovia Bank also hold senior roles on the credit.
ACS is known for its aggressive growth strategy, with 50 acquisitions since its inception in 1988, and the company has adopted a yearly goal to improve cash flows by 10% through internal growth and 10% through acquisitive growth. The Dallas-based systems and business process outsourcing company closed the line days before announcing that it was no longer planning to acquire Procter & Gamble's shared services operations, but Vineyard said the two matters were not related.