ServiceMaster entered into a credit agreement for a $1 billion short-term credit facility with JPMorgan Chase Bank as administrative agent. The company will use the proceeds to repay principal, interest, or premium on the term loans under its existing amended and restated credit agreement.
According to a related 8-K filing, the facility will mature on September 30, 2018 and contains covenants that are substantially similar to the covenants of the existing credit agreement. The interest rates applicable to the new loans are based on a fluctuating rate of interest measured by reference to either, at the borrower’s option, an adjusted LIBOR plus 2.50% per annum or an alternate base rate plus 1.50% per annum. Prior to the maturity date, ServiceMaster may prepay the loans at any time, in whole or in part, without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans.
ServiceMaster also put up an offering of $350 million of 6.75% senior notes due 2026 and entered into a $650 million term loan facility due 2025. The notes are expected to be sold at a price equal to 100% of their face amount, plus accrued and unpaid interest thereon. The term loan facility is expected to be sold at a price equal to 99.75% of its face value, with an interest rate of LIBOR plus 2.50% per annum or an alternate base rate plus 1.50% per annum, with a 0.00% LIBOR floor.
The financing transactions were taken in conjunction with the planned spin-off of ServiceMaster subsidiary Frontdoor. The result of these transactions and the spin-off would ultimately be a reduction in ServiceMaster’s total consolidated outstanding indebtedness by approximately $1 billion.
Headquartered in Mephis, TN, ServiceMaster provides residential and commercial services through a network of more than 8,000 company-owned locations and franchise and license agreements. The company’s portfolio of brands includes American Home Shield, AmeriSpec, Furniture Medic, Merry Maids, ServiceMaster Clean, ServiceMaster Restore and Terminix.
