Veridian has secured a $200 million credit facility as the last step toward a balance sheet restructuring. James Allen, cfo, said it was necessary to refinance the company's bank debt because many of the terms in the senior credit agreement had to change because of the restructuring. The Arlington, Va., information technology company, which serves the defense industry, now has a single layer of low-cost senior debt and a provision for up to $50 million that can be used for future acquisitions without bank approval, Allen noted, commenting on the advantages of the new facility.
The new credit comprises a five-year, $70 million revolver and a six-year, $130 million "B" term loan. Pricing is linked to a leverage-based grid and currently is set at LIBOR plus 31/ 4% on the "B" piece and LIBOR plus 21/ 4% for the revolver. Allen said the spread is likely to tighten another 3/4% because proceeds from the company's $248.4 million initial public offering will be used to retire its preferred stock and subordinate debt, thereby reducing its overall leverage ratio from close to four times to about 2.25 times.
The former facility, which was obtained in August 2000, comprised a five-year, $79 million revolver priced at LIBOR plus 31/ 4% and a six-year, $110 million term loan priced at LIBOR plus 33/ 4%. Veridian was able to secure lower pricing on the new loan because it is now a public company and because of the reduction in leverage, Allen said.
Wachovia Bank led both the new and former credits. "They were the right choice for us," Allen said. "They have supported us for a long time, and they know our industry well." Wachovia also was one of the underwriters on the company's IPO.