Fairchild refinances with $400 million revolver at Libor plus 175 bps

By Susanna Moon

Chicago, May 23 - Fairchild Semiconductor International, Inc. entered into a $400 million five-year replacement revolving credit facility Friday with JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Interest will be Libor plus 175 basis points.

Under the new terms, there is $50 million available for issuance of letters of credit and $10 million for swingline loans for short-term debt.

At closing, the company paid off its debt under the old facility using $19 million in cash and $300 million of drawdowns under the new facility.

Fairchild may increase the size of the new facility from time to time by a principal amount not to exceed $150 million.

The credit agreement contains two financial covenants: (i) a maximum leverage ratio of total consolidated debt to adjusted EBITDA of 3.25 times for the trailing four consecutive quarters and (ii) a minimum interest coverage ratio of adjusted EBITDA to consolidated interest expense of at least 3 times for the trailing four consecutive quarters.

The negative covenants include limitations on asset sales, mergers and acquisitions, debt, liens, dividends, investments and transactions with the company's affiliates.

"We're pleased to complete this debt reduction and refinancing while taking advantage of the favorable market conditions," Mark Frey, Fairchild's executive vice president and chief financial officer, said in a company press release.

"This relatively low-cost revolver structure and new five-year maturity gives Fairchild considerable financial flexibility to support our rapidly growing business. This deal was significantly oversubscribed and has allowed us to narrow our debt holders to a select group of key relationship banks."

Fairchild is a San Jose, Calif.-based semiconductor supplier.

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