Compass Diversified Holdings (CODI) signed a credit agreement for a revolving credit facility totaling $600 million and a term loan facility in the amount of $500 million.
The new credit agreement, led by Bank of America Merrill Lynch, SunTrust Robinson Humphrey, TD Securities and U.S. Bank as joint lead arrangers, combines for $1.1 billion in new debt financing and replaces the company’s previous revolving credit facility and term loan facility. According to a related 8-K filing, Bank of America served as administrative agent.
Under the terms of the five-year revolving credit facility, which is subject to borrowing restrictions, amounts borrowed bear interest based on either LIBOR plus a margin ranging from 1.50% to 2.50% or prime plus a margin ranging from 0.50% to 1.50%, as determined by a leverage ratio defined in the credit agreement. Under the terms of the seven-year term loan facility, amounts borrowed bear interest based on either LIBOR plus a margin of 2.25% or 2.50% or prime plus a margin of 1.25% or 1.50%, as determined by such a leverage ratio. The term loan facility requires quarterly payments of $1.25 million, with a final payment of the outstanding principal balance due April 18, 2025.
The company utilized the proceeds from the term debt facility and the notes offering to refinance existing term loan indebtedness and repay revolving loan indebtedness under its previous credit agreement. There are initial borrowings outstanding under the new revolving credit facility of approximately $73 million at closing. The company estimates it has approximately $500 million in net borrowing availability under its new revolver as of the closing date.
The company expects to utilize the future borrowings under the revolving credit facility to fund future expansion opportunities at its existing subsidiary companies, fund acquisitions of new platform acquisition opportunities and provide for working capital and general corporate uses.
Elias Sabo, CODI’s CEO-elect, said, “We are pleased to have completed our recent financings under favorable terms, enabling the company to enhance our financial flexibility, extend our debt maturities and further diversify our capital structure.”
Westport, CT-based CODI owns and manages a diverse family of established North American middle market businesses.
