WEX to save millions in debt repricing

Courtesy / WEX WEX Inc., South Portland-based global provider of corporate payment solutions, successfully completed a repricing effort that will save $11 million annually on interest costs.

Write a Comment

By Staff

WEX Inc. (NYSE: WEX) successfully repriced two secured term loans worth almost $440 million, reducing its interest costs for an annual savings of $11 million.

The South Portland-based global provider of corporate payment solutions announced its plans in early June to reprice an existing $438 million Term A loan and a $1.191 million term B loan. The closing on its repricing effort was announced in a July 3 news release.

WEX Treasurer Michael Thomas told Mainebiz in June that the company's repricing initiative was driven by an opportunity to lower its interest costs.

"Credit markets have improved and investors are willing to accept a lower interest rate," he said. "Although short-term rates are rising, this repricing pertains to the spread above the floating rate index which our interest payment is based on."

He said the prospective lenders that WEX was reaching out to included "buyers of corporate debt, insurance companies and mutual funds."

The advantage to WEX of going the route of repricing its debt instead of refinancing is that it avoids transaction costs associated with a refinance; in effect, the investors are making a simple amendment to the existing agreement to lower the interest rate.

The chief benefit of repricing, he added, is that it would allow WEX to pay down debt faster, since it would be paying less interest than if it didn't pursue that option.

The Financial Times reported in mid-January that U.S. companies were rushing to reprice debt as higher rates loom and that the surge in repricing transactions was driven by strong investor demand for loan funds.