NCO sets Thursday launch for $565 million credit facility

By Sara Rosenberg

New York, Oct. 11 - NCO Group Inc. firmed up timing on the launch of its proposed $565 million senior secured credit facility with the scheduling of a bank meeting for Thursday, according to a market source.

All that was known on timing previously was that it would likely be October business.

Morgan Stanley and JPMorgan are the lead banks on the deal.

The facility consists of a $100 million five-year revolver and a $465 million seven-year term loan, with both tranches expected to be priced at Libor plus 250 basis points.

The revolver has a 50 bps unused fee.

Of the total revolver amount, $75 million is committed and $25 million is subject to syndication.

The credit facility has a $100 million accordion feature.

Proceeds from the credit facility will be used to help fund the acquisition of NCO by its chairman and chief executive officer, Michael J. Barrist, in partnership with One Equity Partners II LP, for $27.50 per share in cash. The transaction is valued at $1.26 billion.

When the deal was first announced, the credit facility commitment totaled $550 million, consisting of a $450 million term loan and a $100 million revolver. However, the commitment letter was later revised to increase the size of the term loan by $15 million.

Other acquisition financing will come from $365 million of senior subordinated notes, backed by a $365 million subordinated increasing rate bridge loan commitment, and up to $368.2 million of equity from One Equity Partners.

The transaction is expected to be completed in the fourth quarter, subject to receipt of shareholder approval and customary regulatory approvals as well as satisfaction of other customary closing conditions.

In August, the company announced that it received notice from the Federal Trade Commission that early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act was granted.

NCO is a Horsham, Pa., provider of business process outsourcing services.

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