LPL Financial to launch $1.6 billion credit facility on Wednesday

By Sara Rosenberg

New York, March 6 - LPL Financial LLC is set to hold a bank meeting at 2 p.m. ET on Wednesday to launch a proposed $1.6 billion credit facility, according to sources.

Bank of America Merrill Lynch and Goldman Sachs & Co. are the joint lead arrangers and bookrunners on the deal, with Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC as additional bookrunners.

The facility consists of a $250 million revolver that is expected to be undrawn at close and $1.35 billion in new term loans, sources said.

Proceeds will be used to replace an existing $163.5 million revolver and $1.33 billion in term loan borrowings as well as to pay related refinancing expenses.

Pricing on the company's existing revolver is Libor plus 350 basis points. LPL's term loan borrowings have interest rates of Libor plus 175 bps on the term loan due 2013, Libor plus 275 bps with a 1.5% Libor floor on the term loan due 2015, and Libor plus 375 bps with a 1.5% Libor floor on the term loan due 2017, according to a recent 10-K filed with the Securities and Exchange Commission

In a news release on Tuesday, LPL said that it believes the refinancing will "strengthen its capital structure by extending the maturity of its facilities to 2017 and 2019 and may reduce the average interest expense under its currently outstanding indebtedness."

With the refinancing, the company is seeking permission to declare a one-time special dividend for all common stockholders of up to $230 million using cash on hand and also a regular quarterly dividend of up to $0.48 per share annually.

Closing on the new credit facility is expected to occur in the second quarter.

LPL Financial is a broker-dealer, an RIA custodian and a consultant to retirement plans with headquarters in Boston, Charlotte, N.C., and San Diego.

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