Goosehead Insurance Holdings entered into a new $40 million term note payable and $13 million revolving credit facility agreement. J.P. Morgan Chase acted as sole bookrunner for the refinancing.
Borrowings from the agreements were used to retire the company’s previously existing note payable and revolving credit facility, as well as for working capital needs and general corporate purposes. Goosehead also has the ability, subject to approval, to increase the commitments under the credit facilities by an additional $50 million.
Under the new agreement, borrowings initially accrue interest on amounts drawn at LIBOR plus 2.50%, a 300 basis point improvement from the retired debt’s accrued interest rate of LIBOR plus 5.50%. Interest rates past the initial period are based on the company’s leverage ratio for the preceding period, but are capped at LIBOR plus 2.50%.
“We are pleased to enter into this new agreement, which significantly lowers our overall cost of capital – a testament to Goosehead’s ability to demonstrate rapid and profitable growth over the past several years, which is reflected in our operating results and balance sheet,” said Mark Colby, Goosehead CFO.
The term note payable and revolving credit facility are collateralized by substantially all of the company’s assets, which includes rights to future commissions. The credit agreement contains certain covenants, including maintenance of specified interest coverage and leverage ratios, and certain other restrictions.
Goosehead is an independent personal lines insurance agency that distributes its products and services throughout the U.S.
