WNS Announces Refinancing of Term Loan at Lower Rates
WNS (Holdings) , a leading provider of global business process outsourcing (BPO) services, today announced that it will refinance its existing term loan facility to take advantage of lower interest rates. The refinancing will entail making the third scheduled repayment of $20 million on the existing term loan, and prepaying the remaining $115 million on the loan with cash on hand and proceeds from a new term loan facility for $94 million that WNS has obtained vide facility agreement dated July 2, 2010 from HSBC, Hong Kong, DBS Bank Ltd, Singapore and BNP Paribas, Singapore. There are no penalties for the prepayment, which is expected to take place on July 12, 2010. WNS also announced today that it has established a $30 million line of credit in the U.K., which will be drawn down from time to time to partly fund WNS’s U.K. business.
The interest rate of the new term loan and the credit line will be approximately 100 basis points lower than the existing facility. The payment schedule of the new $94 million term loan will mirror the payment schedule of the existing term loan.
“The new facilities that we have put in place will have an interest rate savings of over one hundred basis points and will make our debt more tax efficient,” said Alok Misra, WNS’s Group CFO. “In addition, due to the fact that we have serviced the existing term loan so effectively, the covenants on the new loan are more relaxed and give us a greater degree of operational flexibility.”
The prepayment will result in a one-time charge of approximately $5.4 million primarily on account of the reclassification of fair value of interest rate swaps from Other Comprehensive Income in Balance Sheet to earnings as the swaps on the existing term loan will lose hedge effectiveness and the write-off of the remaining debt issuance costs associated with the existing term loan in 2008.
“While the prepayment of our existing term loan will result in a one-time charge of approximately $5.4 million, this will have minimal impact on our cash flow and our interest savings should enable us to recoup most of this charge within the current fiscal year. This has already been factored into our guidance for the fiscal year,” Misra added.
WNS intends to furnish the new term loan facility agreement to the U.S. Securities and Exchange Commission along with its next quarterly results report.
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