Source: Savvis
SAVVIS, Inc. (NASDAQ:SVVS), a leading global IT utility, announced today that it has entered into an $85.0 million senior secured revolving credit facility (the "Facility") with Wells Fargo Foothill, Inc., as arranger and administrative agent, and has repaid its $53.7 million capital lease agreement with General Electric Capital Corporation (the "Lease").
At current interest rates, SAVVIS expects savings in cash interest expense of approximately $1.0 million in 2005 and $2.7 million in 2006, compared to the payments required under the Lease.
In addition to repaying the Lease, SAVVIS may use the Facility for working capital, the issuance of up to $15 million in letters of credit, and other general corporate purposes. The Facility will mature in November 2008.
SAVVIS Chief Financial Officer Jeff Von Deylen commented, "This new credit facility both reflects and contributes to continued improvement in SAVVIS' financial condition. Our improved Adjusted EBITDA performance since our March 2004 acquisition of certain assets of Cable & Wireless has provided an opportunity to lower our interest costs, eliminate certain restrictive financial covenants, and increase our financial flexibility. We remain confident that SAVVIS will achieve Adjusted EBITDA of $55-65 million in 2005, and are revising our projection for cash interest expense payments from $15-16 million to $14-15 million. We have been pleased to partner with GECC, which supported SAVVIS from its earliest years, and look forward to a mutually beneficial relationship with our new partner Wells Fargo Foothill."
SAVVIS will use the initial borrowing of $58.0 million under the Facility to repay $53.9 million of principal outstanding and accrued interest under the Lease, and to pay fees and expenses associated with the refinancing. In addition, SAVVIS will use $9.8 million against the Facility for existing standby letters of credit. Following these borrowings, SAVVIS will have a remaining borrowing capacity of $17.2 million under the Facility. The interest rate on the Facility is variable, based on LIBOR market rates, with an interest rate at the time of the initial borrowing of 1-month LIBOR plus 3.00%, currently 6.2%. Interest on the repaid Lease was 9%, which was scheduled to increase to 12% in September 2005. For full details on the terms of the Facility, please see SAVVIS' Form 8-K to be filed with the U.S. Securities and Exchange Commission on or before June 16, 2005.