Sterling Infosystems gets $700 million credit agreement

By Mary-Katherine Stinson

Lexington, Ky., Nov. 30 – Sterling Check Corp. subsidiary Sterling Infosystems, Inc. as borrower and Sterling Intermediate Corp. as parent entered a credit agreement on Nov. 29 providing a borrowing capacity of $700 million, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement is comprised of $300 million total in term loans and a $400 million revolving credit facility.

The credit agreement matures Nov. 29, 2027.

Outstanding borrowings bear interest at SOFR plus a 10 basis points credit spread adjustment in each case plus a tiered floating interest rate margin based on the net leverage ratio of the borrower. In four tiers, the margin will be between 175 bps and 250 bps. The starting margin is 225 bps.

The commitment fee on the revolver will be between 20 bps and 30 bps. The initial commitment fee is at tier three, 25 bps.

The term loans amortize quarterly in the following amounts: $1.875 million for the first four full quarters after closing, $3.75 million for the next eight quarters and $5.625 million for the next eight quarters.

Available funding capacity under the revolver can be used to issue letters of credit subject to a $40 million sublimit.

The agreement also contains financial covenants requiring the maintenance of a maximum net leverage ratio of 4x which may be increased to 4.5x for four quarters after an acquisition during any six-month period for which the total cash consideration is at least $75 million and a minimum interest coverage ratio of 3x, both tested quarterly.

The credit agreement is guaranteed by the parent Sterling Intermediate Corp.

KeyBank NA is the administrative agent as well as the collateral agent, swingline lender and letter of credit issuer.

KeyBank Capital Markets Inc., Wells Fargo Securities LLC, Citizens Bank NA and JPMorgan Chase Bank, NA are the joint lead arrangers and joint bookrunners.

Regions Bank is the syndication agent.

Citigroup Global Markets Inc. and Goldman Sachs Lending Partners LLC are the co-documentation agents. Goldman Sachs Lending Partners is an affiliate of the owners of a majority of Sterling Check Corp.’s common stock.

Proceeds of the term loans, together with borrowings of approximately $223 million under the revolving credit facility, were used to repay all outstanding debt, including accrued and unpaid interest in a total of approximately $513.9 million under its first-lien credit agreement dated June 19, 2015. The existing facility was terminated.

Sterling is a New York-based provider of comprehensive employment and background screening services.

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