West Corp. expanded its credit facility and grabbed better pricing at the same time when it turned to historic lead Wachovia Securities to provide the financing for two acquisitions it closed in early April. The Omaha, Neb.-based provider of outsourced communication solutions doubled the size of its revolving credit facility to $800 million to pay for the acquisition of Raindance Communications and Intrado.
"We did two acquisitions, one in the conferencing segment and one was in the communications segment," said Paul Mendlik, cfo. "They were done for different reasons, one to support growth in the conferencing area and one to get into a line of business closely related to communication services."
In January, West acquired Intrado, which provides 9-1-1 infrastructure systems and services. Intrado will operate as part of West's communications services segment. George Heinrichs and Stephen Meer, Intrado's co-founders, will continue in their roles as president and chief technical officer. Mendlik would not discuss the possibility of any other acquisitions, but said the company has done 10 or 11 acquisitions in the last four years and plans to continue acquire businesses as opportunities arise.
Along with Wachovia, Bank of America, Wells Fargo, US Bank, Scotia Capital and JPMorgan were agents on the deal. Mendlik said that all but JPMorgan had been members of the original financing, which was initially put in place in April 2003 for an acquisition. The company amended that facility in November 2004. The company initially turned to Wachovia because the bank had been doing leasing work for West for about two years prior to the initial financing.
JPMorgan was new to this deal and substituted for BNP Paribas, which decided not to recommit. JPMorgan was added, "because they had been interested in getting involved with us and have been active in terms of getting to know us and becoming familiar with the company," Mendlik said. He explained that it was BNP's choice not to join this deal.
The company also cut spreads with the new financing. At the lowest level of leverage, pricing now has a minimum interest rate of 40 basis points if leverage is less than .5 to 1 times EBITDA to debt. The lowest spread had previously been 75 basis points. The highest spread is now 87.5 basis points; it was previously 125 basis points.