VSE expands credit facility to $400 million, extends maturity date

By Marisa Wong

Morgantown, W.Va., Jan. 8 – VSE Corp. and a majority of its wholly owned subsidiaries entered into a fourth amended and restated loan agreement on Jan. 5 with Citizens Bank of Pennsylvania and a syndicate of eight other banks, including three new lenders, according to an 8-K filing with the Securities and Exchange Commission.

The loan agreement amends and restates VSE’s prior third amended and restated loan agreement dated Jan. 28, 2015 with Citizens Bank of Pennsylvania and other lenders.

The newly restated loan agreement provides for a $100 million term loan and a $300 million revolver with a $20 million sub-limit for letters of credit, which represents an additional $155.6 million of committed funding over that of the previous loan agreement.

Under the previous agreement, the outstanding principal balance under the company’s term loan was about $94.4 million. The company also had capacity of $150 million under its revolver.

At closing, the company drew $79 million under the new revolver.

The new loan agreement, among other changes, extends the maturity date of both the term loan and the revolver to Jan. 5, 2023 from Jan. 28, 2020 and provides a more favorable interest rate structure. The exact interest rate margins and unused commitment fees under the amended facility were not disclosed in the 8-K.

VSE increased the amount of any incremental loan facilities to $100 million from $75 million for either the term loan, the revolver or both facilities.

The company also adjusted the term loan principal payments to be made according to a five-year amortization schedule, under which payments are greater in the later years than in the earlier years.

In addition, the restated loan agreement requires that VSE hedge the rate of interest on no less than 50% of the outstanding amount of the term facility for the first three years after the closing date.

The loan agreement is secured by substantially all of the assets of the borrowers and contains some financial covenants, including a total funded debt to EBITDA ratio and fixed-charge coverage ratio.

VSE entered into the current loan agreement to refinance its outstanding debt under the previous loan agreement, to finance any permitted acquisitions and for working capital support, letters of credit, capital expenditures and general corporate purposes.

VSE is a diversified logistics and services company based in Alexandria, Va.

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