Fairchild gets $400 million five-year loans at Libor plus 125-200 bps

By Susanna Moon

Chicago, Oct. 2 – Fairchild refinanced its loans with a $400 million five-year revolving credit facility at reduced rates on Sept. 26, according to an 8-K filing with the Securities and Exchange Commission.

Interest on the loans will range from Libor plus 125 basis points to Libor plus 200 bps, based on leverage. The unused fees range from 20 bps to 35 bps.

The facility has a $50 million sublimit for the issue of standby letters of credit and $20 million sublimit for swingline loans.

Fairchild said it drew about $200 million from the new facility at closing and paid off all its debt under the previous facility.

The revolver continues to include a $300 million accordion feature.

The company may add one or more tranches of incremental loans in the form of incremental term loan facilities or incremental increases in the revolving credit facility of up to $300 million.

The covenants require a maximum leverage ratio of total consolidated debt to adjusted EBITDA for the trailing four consecutive quarters of 3.25 times and a minimum interest coverage ratio of adjusted EBITDA to consolidated interest expense for the trailing four consecutive quarters of at least 3 times.

Bank of America, NA is the administrative agent with Bank of America Merrill Lynch, HSBC Bank USA, NA, Citizens Bank, NA and Fifth Third Bank as joint lead arrangers and joint bookrunners.

The agreement replaces the company’s revolver set to mature in May 2016.

“The deal was two times oversubscribed with 14 banks participating including five new institutions,” Mark Frey, Fairchild’s executive vice president, chief financial officer and treasurer, said in a press release.

“We expect this relatively low cost revolver structure to reduce our interest expense by more than $1 million annually, at current debt and EBITDA levels, while giving us a new five-year maturity horizon.”

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

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