Service Corp. gets new $200 million revolver

By Sara Rosenberg

New York, Aug. 16 - Service Corp. International closed on a new $200 million three-year credit facility that includes a $175 million sublimit for letters of credit.

J.P. Morgan Securities Inc. and Banc of America Securities LLC were joint lead arrangers and bookrunners on the deal. JPMorgan Chase Bank is administrative agent, Bank of America is syndication agent and Calyon, Southwest Bank of Texas and Merrill Lynch Capital Corp. are co-documentation agents.

The interest rate and the commitment fee on the revolving credit facility are based on the company's leverage ratio. If leverage is greater than or equal to 3.5-to-1.0, then the spread is Libor plus 225 basis points and the commitment fee is 50 basis points. If leverage is less than 3.5-to-1.0 but greater than or equal to 3.0-to-1.0, then the spread is Libor plus 200 basis points and the commitment fee is 50 basis points. If leverage is less than 3.0-to-1.0 but greater than or equal to 2.5-to-1.0, then the spread is Libor plus 175 basis points and the commitment fee is 50 basis points. If leverage is less than 2.5-to-1.0 but greater than or equal to 2.0-to-1.0, then the spread is Libor plus 150 basis points and the commitment fee is 37.5 basis points. And, if leverage is less than 2.0-to-1.0, then the spread is Libor plus 125 basis points and the commitment fee is 25 basis points, according to a 10-Q filed with the Securities and Exchange Commission Monday.

Covenants include a minimum interest coverage ratio requirement and a maximum leverage ratio requirement (see table).

Security is the stock of the company's domestic subsidiaries.

The new facility, which provides greater flexibility in terms of acquisitions, dividends and share repurchases, replaces the previous $185 million loan that was set to mature in July 2005.

Service Corp., a Houston-based funeral and cemetery company, closed on the facility on Aug. 11.

Interest Coverage and Leverage Ratios

Fiscal quarter ending Minimum interest coverage ratio Maximum leverage ratio

Sept. 30, 2004 3.00-to-1.00 4.00-to-1.00

Dec. 31, 2004 3.25-to-1.00 4.00-to-1.00

March 31, 2005 3.25-to-1.00 4.00-to-1.00

June 30, 2005 3.25-to-1.00 4.00-to-1.00

Sept. 30, 2005 3.25-to-1.00 3.50-to-1.00

Dec. 31, 2005 3.50-to-1.00 3.50-to-1.00

March 31, 2006 3.50-to-1.00 3.50-to-1.00

June 30, 2006 3.50-to-1.00 3.50-to-1.00

Sept. 30, 2006 3.50-to-1.00 3.00-to-1.00

Dec. 31, 2006 3.50-to-1.00 3.00-to-1.00

March 31, 2007 3.50-to-1.00 3.00-to-1.00

June 30, 2007 3.50-to-1.00 3.00-to-1.00

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