Shutterfly entered into a credit agreement for a senior secured delayed draw term loan B and a senior secured revolving credit facility.

The $300 million term loan carries a margin of LIBOR + 250 basis points and was issued at a discount to par of 50 basis points. The term loan has a maturity of seven years and a delayed draw period providing Shutterfly with flexibility to draw the facility over the next six months.

Simultaneous with the pricing of the term loan, the company raised a new $200 million senior secured revolving credit facility. The new revolving credit facility carries a margin of LIBOR + 175 basis points and a maturity date of August 17, 2022.

Morgan Stanley Senior Funding served as administrative and collateral agent.

“This transaction takes advantage of today’s attractive debt market to finance the repayment of our $300 million convertible debt due in May 2018, which the company expects to repay at maturity. The term loan B structure provides us with very low-cost funding, along with excellent strategic and operational flexibility,” said Mike Pope, CFO.

The credit agreement permits the company to add one or more incremental term loan facilities and/or increase the commitments for revolving loans in an aggregate principal amount of up to $200 million, plus an additional amount equal to the amount of any voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with a secured net leverage ratio test.

The proceeds of the loans can be used to repay all the company’s obligations under its existing credit agreement with JPMorgan Chase Bank as administrative agent, to pay fees related to the agreement, to settle Shutterfly’s existing 0.25% convertible senior notes due 2018, and for working capital and general corporate purposes.

Shutterfly is an internet-based image publishing company headquartered in Redwood City, CA.