Language Line, the world's largest provider of over-the-phone translation services, has secured $200 million in bank debt via TD Securities amid a difficult financing environment that has seen banks pull back from extending credit. Matt Gibbs, cfo for Language Line, explained the market is tough right now, "partly because of the things that have gone wrong in the last six to eight months. People are gun-shy right now and don't want to extend credit." The fallout with new economy companies has made banks particularly wary of anything cutting edge, he said. Language Line utilizes some interesting technology, but it is not seen as a cutting-edge business, Gibbs explained.
Banks missing from the current syndicate who were on the last credit are Dresdner Bank and Citizens Bank, which are reworking their approach to lending, he said. New entrants to the bank group include Bank of New York, GE Capital and Crédit Agricole. Officials' from Citizens told Language Line the bank does not want to be in cash-flow deals right now, said Gibbs. Wachovia Bank is not a part of the deal as First Union is on the credit, and a larger commitment was not made as the bank was working through the merger, he noted.
TD was selected to re-lead the credit because "Toronto Dominion pushed the envelope in terms of the amount and maybe a little bit on pricing," he said. Pricing on the credit, split between a $40 million revolver and $160 million term loan is LIBOR plus 31/ 4%, while the maturity is 5 3/4 years. The credit will be used to replace higher-cost debt and pay a dividend back to Providence Equity Partners.