Houston-based HCC Insurance Holdings has reduced its revolving credit facility and cut back on the number of banks in its group. Stephen Way, chairman and ceo of HCC, said after a $155 million equity offering, the company had very little debt. "With alternative forms of financing available, there is no point having more than necessary and paying the fees," he noted. Way said the company reduced its bank group due to the downsizing on the facility.
The facility now stands at $200 million from a previous $300 million. "Money is fairly cheap at the moment, either straight bullet loans or public debt, so it was a good time to refinance," Way commented, adding, "The bank debt market is much tougher, however, than other forms of financing." HCC has also filed an amended shelf registration that can provide up to $600 million of additional financing through common stock, warrants and senior and subordinated securities.
Wells Fargo retained the lead role on the reduced credit, based on longstanding ties, with Bank of America and Citibank also holding lead roles. First Union, Bank of New York and Southwest Bank of Texas also committed, said Way. He declined to name the banks cut from the group. There are four more years to run on the credit, which is priced on a leverage grid basis ranging from 75 basis points to 115 basis points. The commitment fee charged on the unused portion of the facility is now 15 basis points. Previously the spread was 87.5 basis points to 150 basis points, based on leverage, with a 25 basis points commitment fee according to Capital DATA Loanware.
HCC Insurance Holdings sells specialized property and casualty insurance, underwrites for unaffiliated insurance companies, and provides related services for commercial and individual customers.