BancTec closed a $100 million revolving credit facility with Heller Financial and the company will pay off an existing $50 million deal with J.P. Morgan Chase. BancTec had been under violation with covenants on its existing deal. Brian Stone, cfo, says the new facility offers enhanced flexibility. "This allows us to replace the Chase facility with a more flexible financing structure, one that also provides BancTec with ongoing working capital financing," he said, adding that the new facility was preferable to the proposed extension terms from the Chase group. "We received a better interest rate and more availability [in funding] under the new facility." The new deal also pays down the remaining balance on the Chase credit. BancTec, based in Dallas, is a provider of maintenance services for major computer companies, government and corporate customers.
Heller is the sole lead of the asset-backed deal. Stone explained that it offered terms, structure, and pricing that best suited the company. He noted that after amending certain provisions of the Chase agreement, the interest rate rose 1/2% to LIBOR plus 2 3/4%. "At the same time, because this is a larger credit facility, we have essentially doubled our available borrowing base," he said. Stone did not explain what covenants on the original deal the company had violated. BancTec has no other lines of credit, but does have senior notes outstanding. The new deal expires at the end of 2006. "Given our capital structure, a bank loan was the best option for us," Stone said.