VeriSign arranges $200 million revolver due 2020 via JPMorgan

By Toni Weeks

San Luis Obispo, Calif., April 1 – VeriSign, Inc. entered into a credit agreement for a $200 million committed senior revolving credit facility on Tuesday with JPMorgan Chase Bank, NA as administrative agent and J.P. Morgan Europe Ltd. as London agent, according to an 8-K filing with the Securities and Exchange Commission.

The facility, which matures on April 1, 2020, includes a $35 million sublimit for the issuance of standby letters of credit and a $35 million sublimit for swingline loans. Loans may be extended in dollars and certain other currencies, with a $35 million sublimit for loans in alternative currencies.

The agreement includes an accordion feature for an additional up to $150 million of commitments with lender consent.

Loans will bear interest at a floating rate unless VeriSign invites lenders to provide competitive bid loans at negotiated interest rates, which will utilize the available commitment under the facility. The floating rate will be Libor plus 150 basis points to 200 bps, and the commitment rate is 20 bps to 30 bps, both dependent on the leverage ratio.

VeriSign may prepay loans without penalty, but those prepayments would be subject to payment of any broken-funding costs of the lenders. Prepayment of competitive bid loans, however, will require consent of the bidding lenders.

Under the agreement, the company may not permit the ratio of consolidated EBITDA to consolidated cash interest expense to be less than 3 times, and it may not permit the leverage ratio to exceed 2.5 times.

At closing, the full amount of the facility was undrawn, according to the filing. Borrowings may be used for working capital, to finance acquisitions, stock repurchases and capital expenditures and for other general corporate purposes. Letters of credit will be issued for general corporate purposes.

In connection with entering into the credit agreement, VeriSign terminated in full all commitments under its previous credit agreement dated Nov. 22, 2011. That facility required the company to maintain a leverage ratio not exceeding 2 times.

Reston, Va.-based VeriSign is an internet infrastructure services provider.

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