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On Assignment sets Wednesday launch for $540 million credit facility
By Sara Rosenberg
New York, April 9 - On Assignment Inc. has set a bank meeting for Wednesday to launch its proposed $540 million senior secured credit facility, according to a market source.
Wells Fargo Securities LLC, Bank of America Merrill Lynch and Deutsche Bank Securities Inc. are the lead banks on the deal.
The facility consists of a $50 million revolver that will be undrawn at close and a $490 million term loan.
Official price talk is not yet available as the company is waiting on ratings, the source said.
In a PREM14A recently filed with the Securities and Exchange Commission, the company said that it anticipates pricing on the term loan to be Libor plus 375 basis points with a 1.25% Libor floor.
The deal includes a maximum debt covenant.
Proceeds will be used to fund the purchase of Apex Systems Inc. and to refinance debt at both companies.
Under the agreement, On Assignment will acquire all of Apex Systems' equity and retire all of its debt for a total of $600 million. The purchase price is comprised of $383 million in cash and newly issued stock valued at $217 million.
Funded debt of the combined company will total about 3.75 times estimated pro forma adjusted EBITDA for the 12 months ended March 31.
The company had previously said that it expects that its increased scale, strong revenue and free cash flow will allow it to deleverage rapidly.
On a pro forma basis, 2011 revenue of the combined entity was $1.3 billion.
Closing is expected in May, subject to approval by On Assignment's shareholders, regulatory approvals and other customary conditions.
On Assignment is a Calabasas, Calif.-based provider of professionals in the technology, health care and life sciences sectors. Apex is a Richmond, Va.-based information technology staffing and services firm.
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