Encompass Services amends credit facility adding $300 million revolver

By Sara Rosenberg

New York, June 28 - Encompass Services Corp. said it amended its credit facility, providing for a $300 million revolving credit facility and modifying covenants through the credit agreement's maturity date.

At June 27, about $153 million was available for borrowing under the revolver. The revolver matures in February 2005.

All in all, the company has $700 million committed under its credit facility consisting of $400 million in term loans due in 2006 and 2007 and a $300 million revolver.

Encompass plans to issue $72.5 million in equity and Apollo Investment Fund IV LP agreed to purchase $35 million of the equity offering, the company said. The rights offering must be completed by Oct. 15, 2002. Until the Apollo Investment is funded, the revolver is limited to a size of $250 million. Furthermore, the amendment requires the company to reduce the term loans by $31 million immediately following the receipt of the Apollo equity investment. Half of the proceeds from the stock offering in excess of $35 million must be used to reduce the revolver and the term loans on a pro rata basis, the release said.

"I believe these transactions will greatly benefit all of our shareholders, and the rights offering will provide all shareholders the opportunity to participate," said Joe Ivey, president and chief executive officer, in a press release. "I am pleased with the support and commitment that Apollo has demonstrated, and the enhanced financial flexibility achieved with the amended credit agreement. I look forward to personally sharing these positive developments with our valued customers, vendors and employees, who are key to our commercial success. These transactions clearly provide Encompass with the commercial flexibility to execute our long-term business plan and respond to developing market opportunities."

Encompass Services is a Houston, Tex. provider of facilities systems and services.

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