Brightpoint, a distributor of mobile phones based in Indianapolis, switched its lead lender from BANK ONE to GE Capital for its new $80 million revolver after putting the facility out to bid. Phillip Bounsall, cfo, said the company went with GE Capital because it offered the best package in terms of flexibility of the covenants and the amount of borrowing availability outside of the U.S. "Brightpoint was initially trying to increase the flexibility and extend the terms of the old loan. Of all the choices this [a new facility] seemed the most appropriate," he said. He declined to name the other banks considered or pricing on the new or old deals.
The revolver is an asset-based facility, with availability based primarily on the percentage of legible accounts receivable and inventory. The terms of the revolver limit Brightpoint from selling certain assets and making certain payments, though Brightpoint may repurchase its convertible bonds.
Explaining the decision to opt for the asset-based route, Bounsall would only comment that it was the only way to get more flexible borrowing terms. "The old loan was not asset-based, but it quickly became apparent this was the best bet," he said. The old loan was multi-currency, but had stricter covenants on its use outside of the U.S., whereas the new loan is U.S. denominated. The revolver will be used for working capital, he noted. Brightpoint supports the wireless telecommunications and data industry by supplying third-party solutions.