VeriFone sets Thursday launch for $1.6 billion credit facility

By Sara Rosenberg

New York, Nov. 29 - VeriFone Systems Inc. scheduled a bank meeting in New York for 12:30 p.m. ET on Thursday to launch its proposed $1.6 billion senior secured credit facility, according to a market source.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Wells Fargo Securities LLC, Barclays Capital Inc. and RBC Capital Markets LLC are the lead banks on the deal.

The facility consists of a $350 million five-year revolver, a $1 billion five-year term loan A and a $250 million seven-year term loan B, the source said.

Ratings are to be determined, but the expectation is for corporate ratings of Ba3/BB-, the source added.

Proceeds will be used to help fund the purchase of Point Group from Nordic Capital for about €770 million, consisting of cash to shareholders of €600 million and repayment of Point debt of €170 million.

In addition to funding the acquisition, the new credit facility will be used to refinance Verifone's existing $217 million term loan and $277 million of convertible notes that come due in June 2012.

Leverage will be around 3 times, or slightly more, but the company previously said that deleveraging should happen quickly due to strong cash flow generation.

Total debt costs are expected at $60 million per annum, and free cash flow before interest expense should rise to more than $350 million per year from around $300 million per year.

Following completion of the transaction, liquidity is anticipated to be strong with more than $350 million of remaining cash on the balance sheet and $100 million of availability under the new credit facility.

Closing is targeted by the end of the year, subject to customary conditions.

VeriFone is a San Jose, Calif.-based secure electronic payment services company. Point is a Stockholm-based provider of multichannel electronic payment services.

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