Watsco gets $500 million five-year facility at Libor plus 87.5 bps

By Susanna Moon

Chicago, Dec. 12 – Watsco, Inc. obtained its $500 million five-year credit facility on Dec. 5 at Libor plus 87.5 basis points, according to an 8-K filing with the Securities and Exchange Commission.

The spread ranges from 87.5 bps to 150 bps based on leverage.

The unused fee is 7.5 bps and ranges from 7.5 bps to 20 bps.

Bank of America Merrill Lynch and JPMorgan Chase Bank, NA are the joint lead arrangers.

The facility has a seasonal component from Oct. 1 to March 31 in which the borrowing capacity may be reduced to $400 million from $500 million at the company’s option.

The terms also provide for a $100 million swingline subfacility, a $10 million letter-of-credit subfacility, a $75 million alternative currency borrowing sublimit and an $8 million Mexican borrowing sublimit.

At closing, about $54.7 million of borrowings were outstanding under the facility.

The company drew $54.7 million to repay debut, including accrued interest under the previous credit facility.

The outstanding balance may be prepaid at any time without premium or penalty.

The facility replaces the company’s $300 million revolver dated April 27, 2012.

As reported Dec. 7, the company refinanced the loans with a $500 million five-year credit facility led by Bank of America as administrative agent.

JPMorgan Chase Bank is the syndication agent. BB&T Co., U.S. Bank and Wells Fargo Bank are the documentation agents.

The loan terms “include lower interest spreads, improved covenant flexibility and greater sensitivity to the seasonal nature of our working capital requirements,” according to a previous announcement.

“A committed source of low-cost debt is an important building block of our growth strategy,” Albert Nahmad, Watsco's chairman and chief executive officer, said in the press release.

Miami-based Watsco distributes equipment and supplies for air conditioning, heating and refrigeration.

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