On Assignment cuts term B to $365 million, ups revolver, adds term A

By Sara Rosenberg

New York, April 25 - On Assignment Inc. downsized its seven-year term loan B to $365 million from $490 million, upsized its five-year revolver to $75 million from $50 million and added a $100 million five-year term loan A to the capital structure, according to a market source.

Pricing on the term loan B was left unchanged at Libor plus 375 basis points with a 1.25% Libor floor and an original issue discount of 99, and there continues to be 101 soft call protection for one year.

Revolver pricing is also unchanged at Libor plus 325 bps, and the new term loan A has the same pricing as the revolver, the source said.

The deal has a maximum debt covenant.

Recommitments are due end of day on Friday, the source added.

Wells Fargo Securities LLC, Bank of America Merrill Lynch and Deutsche Bank Securities Inc. are the lead banks on the $540 million senior secured credit facility (Ba3/BB-).

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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