Orthofix International N.V. (NSDQ:OFIX) established a new credit facility worth up to $300 million.
JP Morgan Chase N.A. (NYSE:JPM) and RBS Citizens N.A. (NYSE:RBS) are the company’s administrative agents for the facility, which consists of a $200 million senior secured revolving credit line and a $100 million senior secured term loan. The facility is spread across nine different financial institutions.
Orthofix CFO Bob Vaters said the new credit line is an indication of the increased confidence financial institutions have in Orthofix.
"Our new larger facility … will provide Orthofix with a lower interest rate and more flexible covenants as well as additional borrowing capacity and available credit," Vaters said in prepared remarks.
The new facility includes a $50 million expansion over Orthofix’s prior facility and an interest rate of LIBOR plus 3 percent on both the credit line and loan. The previous rate was 6.75 percent.
The company plans to use the new funds for general corporate purposes, capital expenditures and to pay off its prior credit facility.
Orthofix said it expects earnings per diluted share in the fourth quarter to rise by 5 cents from the new facility, but doesn’t foresee any change to Q3 earnings due to any "interest savings being offset by a $500,000 charge to write-off the unamortized debt placement costs from the previous facility."
The company saw a $10.2 million Q2 profit after revenue rose 4 percent to $137.5 million. Its EPS for for period were 57 cents and as the company set guidance for 2010 at $2.48 to $2.52 per share.
