KAR Completes $1.95 Billion Debt Refinancing
Late last week, KAR Auction Services revealed details of its debt refinancing effort that totaled nearly $2 billion.
The company entered into a $1.7-billion, six-year senior secured term loan facility and a $250-million, five-year senior secured revolving credit facility with a syndicate of lenders.
In addition to replacing the company’s prior senior secured credit facility, officials explained proceeds from the refinancing will be used to redeem the company’s existing $450 million 8.75 percent Senior Notes and $131.1 million 10 percent Senior Subordinated Notes.
KAR said term loan borrowings will bear interest at an adjusted LIBOR rate plus 3.75 percent (with an adjusted LIBOR rate floor of 1.25 percent per annum) and revolving loan borrowings at an adjusted LIBOR rate plus 3.50 percent.
However, for specified types of borrowings, the company insisted it may elect to make term loan borrowings at a base rate plus 2.75 percent and revolving loan borrowings at a base rate plus 2.50 percent.
“In addition, if the company reduces its consolidated senior secured leverage ratio, which is based on a net debt calculation, to levels specified in the credit agreement, the applicable interest rate will step down by 25 basis points,” KAR officials highlighted.
“As of the date of this announcement, the company had not drawn any amounts under the revolving credit facility,” they concluded.