MedAssets, Inc. (NASDAQ: MDAS) announced the completion of a new $750 million senior secured credit facility. Proceeds were used to extinguish the Company’s existing $484 million Term Loan B due 2016 and $150 million revolving credit facility due 2015, of which $90 million was outstanding, and to pay related fees and expenses. The new senior secured credit facility consists of: a $300 million, 7-year Term Loan B bearing interest at LIBOR plus 2.75 percent subject to a 1.25 percent LIBOR floor; a $250 million, 5-year Term Loan A bearing interest at LIBOR plus 2.50 percent; and, a $200 million, 5-year revolving credit facility bearing interest at LIBOR plus 2.50 percent, of which $50 million was drawn at closing. In addition, the Company terminated forward interest rate swaps associated with the indebtedness that was refinanced. “As a result of the favorable credit markets, we have been able to enter into a new debt arrangement to achieve a lower average cost of debt, extended maturities, and an improved covenant structure – all of which contribute to a more flexible, longer-term capital structure to support the company's growth objectives,” said Chuck Garner, executive vice president and chief financial officer. Financial Impact of Debt Refinancing
- The refinancing is expected to result in approximately $6 million in annual cash interest savings as the new term loans have a lower blended interest rate of approximately 3.6 percent per annum compared to the prior blended interest rate of approximately 4.9 percent per annum, assuming that LIBOR does not increase.
- In the fourth quarter ending December 31, 2012, the Company will incur one-time charges including a write-off of approximately $20 million of non-cash deferred financing costs and original issue discount related to the refinanced indebtedness; and a swap termination charge of approximately $8 million.
- The Company’s non-GAAP adjusted EPS guidance for the fourth quarter and full year of 2012 remains unchanged as the one-time charges will be added back in its calculation of adjusted earnings per share.
- The Company expects the refinancing will be accretive to fiscal 2013 earnings per share by approximately $0.07.