Reader's Digest upsizes revolver to $500 million, eases leverage covenant

New York, April 20 - Reader's Digest Association, Inc. amended its revolving credit agreement, increasing the size to $500 million from $400 million, easing the leverage covenant and increasing pricing at higher leverage ratios.

The maximum consolidated leverage ratio - the ratio of total debt to consolidated EBITDA - is now 3.50:1 on the last day of any fiscal quarter except for the quarter ending Sept. 30, 2006 when the limit is 3.75:1, according to an 8-K filing with the Securities and Exchange Commission.

Under the new pricing grid, the interest rate is Libor plus 175 basis points with a 50 basis point commitment fee if leverage is 3.25:1 or higher; Libor plus 150 basis points with a 37.5 basis point commitment fee if leverage is 3:1 or higher but less than 3.25:1; Libor plus 125 basis points with a 25 basis point commitment fee if leverage is 2.5:1 or higher but less than 3:1; Libor plus 100 basis points with a 20 basis point commitment fee if leverage is 2:1 or higher but less than 2.5:1; Libor plus 75 basis points with a 17.5 basis point commitment fee if leverage is 1.5:1 or higher but less than 2:1; and Libor plus 50 basis points with a 15 basis point commitment fee if leverage is less than 1.5:1.

JPMorgan Chase Bank is administrative agent and collateral agent for the five-year revolver. The amendment was effective April 19.

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