Zebra Technologies restructured its debt to reduce interest costs while maximizing financial flexibility.
The company amended its senior secured credit facility maturing July 2021, currently priced at LIBOR + 1.75%. This facility includes its $670 million term loan A and an $800 million revolving credit facility (increased from $500 million), on which $537 million is currently drawn. Under the terms of the amended agreement, the interest rate spread over LIBOR will be reduced by an additional 12.5 basis points upon certification of attainment of a certain debt leverage threshold, which is expected to result in the lower rate spread pricing before the end of 2018.
According to a related 8-K filing, JPMorgan Chase served as the revolving facility administrative agent, tranche A term loan administrative agent and collateral agent. Morgan Stanley Senior Funding acted as the tranche B term loan administrative agent.
The restructuring allowed the company to simplify its international capital structure and aligned the company’s borrowing with its operational entity structure. These restructuring actions are expected to result in annualized interest expense savings of approximately $4 million to $5 million. In Q2/18, Zebra expects to incur approximately $3 million in transaction fees and $5 million to $6 million of accelerated amortization of debt issuance and discount costs.
These actions followed the previously announced comprehensive restructuring of the company’s debt during the second half of 2017, which drove more than $45 million of annualized interest savings.
Lincolnshire, IL-based Zebra Technologies manufactures rugged mobile computers, barcode scanners and barcode printers.