Virtusa closes $100 million revolving facility, $200 million term loan

By Marisa Wong

Morgantown, W.Va., March 2 – Virtusa Corp. entered into a credit agreement on Feb. 25 for a $100 million revolving credit facility and a $200 million delayed-draw term loan, according to an 8-K filing with the Securities and Exchange Commission.

J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. are the joint bookrunners and lead arrangers with JPMorgan Chase Bank, NA as administrative agent.

The credit agreement, which matures on Feb. 25, 2021, replaces the company’s existing $25 million credit agreement with JPMorgan Chase Bank.

In connection with its planned acquisition of a majority interest in Polaris Consulting & Services Ltd., the company drew down the full $200 million of the term loan at closing.

Interest accrues at Libor plus 275 basis points, subject to step-downs based on the company’s ratio of debt to adjusted EBITDA.

The company intends to enter into an interest rate swap agreement to minimize interest rate exposure.

The credit agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants.

The agreement also has financial covenants that require the company to maintain a total leverage ratio, beginning June 30, of not more than 3.25 to 1.00 for the first year, 3.00 to 1.00 for the second year and 2.75 to 1.00 after that.

For a period, expected to be at least one year from completion of the Polaris transaction, until the occurrence of certain events, at any time when the total leverage ratio exceeds 1.50 to 1.00 as of the last day of a quarter, the company must maintain at least $30 million in unrestricted cash, cash equivalents and permitted investments held in U.S. bank deposits and $20 million in unrestricted cash and permitted investments and long-term securities investments held in accordance with the company’s investment policy.

In addition, the financial covenants require the company to maintain a fixed-charge coverage ratio, beginning June 30, of not less than 1.25 to 1.00.

Virtusa is an information technology services company based in Westborough, Mass.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.