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On Assignment sets price talk on $540 million facility with launch
By Sara Rosenberg
New York, April 11 - On Assignment Inc. revealed price talk on its $540 million senior secured credit facility with its Wednesday bank meeting, according to a market source.
The $50 million revolver that will be undrawn at close is talked at Libor plus 325 basis points with no Libor floor and a 75 bps upfront fee, and the $490 million term loan is talked at Libor plus 375 bps with a 1.25% Libor floor and an original issue discount of 99, the source said.
The term loan includes 101 soft call protection for one year, the source continued.
The deal has a maximum debt covenant.
Expected corporate and facility ratings are Ba3/BB-.
Commitments are due on April 25, the source added.
Wells Fargo Securities LLC, Bank of America Merrill Lynch and Deutsche Bank Securities Inc. are the lead banks on the deal.
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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