Blackhawk Network adds $200 million to credit facility for acquisition

By Angela McDaniels

Tacoma, Wash., Oct. 24 – Blackhawk Network Holdings, Inc. expanded its credit facility by $200 million on Thursday and used a portion of the increase to acquire Parago, Inc., according to an 8-K filing with the Securities and Exchange Commission.

New and existing lenders provided $50 million of additional revolving credit facility borrowings and $150 million of additional term loans.

The total principal amount of the facility following the expansion is $725 million, including $375 million of outstanding term loans, up to $250 million of revolver borrowings, of which $50 million was outstanding following the acquisition, and a $200 million facility for letters of credit, of which $47 million are currently outstanding.

Amortization on the $150 million of additional term loans is 10% on March 21, 2016, 15% on March 21, 2017 and the remainder at maturity.

The increase was made under an amendment that also changed the interest rate to Libor plus 125 basis points to 250 bps, depending on the company’s consolidated total leverage ratio, and increased the maximum permitted acquisition amount to $250 million annually and $600 million over the remaining term of the credit facility.

In addition, the limitations on the company’s ability to make restricted payments was amended to permit up to $20 million of restricted payments annually when the company’s pro forma consolidated total leverage ratio is greater than 3 to 1 and up to $40 million of restricted payments annually when that ratio is greater than 2.25 to 1 but less than or equal to 3 to 1.

In connection with the acquisition, the company granted a security interest over some assets of Parago, and Parago became a guarantor of the credit facility.

Following the acquisition, the company must maintain a consolidated total leverage ratio of not more than 3.5 to 1 on the last day of the fourth fiscal quarter of 2014, which must decrease at stated intervals to 3 to 1 by the end of the first fiscal quarter of 2016.

Wells Fargo Bank, NA is the administrative agent.

Blackhawk is a Pleasanton, Calif., prepaid and payments network supporting the distribution of gift cards, prepaid telecom products and financial service products. Parago provides incentive and engagement solutions aimed at acquiring customers, retaining employees and engaging sales partners.

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