BBSI Reaches Agreement in Principle for New Credit Facility With Wells Fargo
New Arrangement to Include a $40 Million Two-Year Term Loan and a $14 Million Revolving Credit Line
VANCOUVER, WA -- (Marketwired) -- 12/15/14 -- Barrett Business Services, Inc. (BBSI) (NASDAQ: BBSI), a leading provider of business management solutions, has reached an agreement in principle on a new credit facility with Wells Fargo, its principal bank.
Under the terms of the agreement, the credit facility will include a $40.0 million two-year term loan maturing January 1, 2017, as well as a $14.0 million revolving credit line, with a $5.0 million sublimit for previously unsecured standby letters of credit, maturing October 1, 2017. The term loan bears interest at LIBOR plus 4%, while the interest rate on advances under the revolving credit line is LIBOR plus 2%.
The Company intends to use a combination of cash on hand and proceeds from the term loan to address the Company's workers' compensation reserve funding requirements by no later than December 31, 2014.
"The increase in our borrowing capacity with Wells Fargo speaks to the confidence our long time commercial banking partner has in BBSI and our business model," said Michael Elich, president and CEO of BBSI. "We requested this additional capacity to address the increase in our workers' compensation liability and claims expense accrual for the 2014 third quarter. This addresses our short-term liquidity needs at a favorable interest rate and allows BBSI to focus on running the business while supporting and growing our client base."
The agreement in principle also provides for an increase of up to a total of $117.9 million in cash-secured letters of credit to satisfy collateral requirements associated with various surety deposits for workers' compensation purposes. At September 30, 2014, the secured letters of credit with Wells Fargo totaled $20.9 million. Upon final execution of the agreement, the Company will file a current report on Form 8-K with the Securities and Exchange Commission.
BBSI (NASDAQ: BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create an integrated operational platform that differentiates it from competitors. The company's platform is built upon expertise in payroll processing, employee benefits, workers' compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI's partnerships help businesses of all sizes improve the efficiency of their operations. BBSI works with more than 3,000 clients across all lines of business in 23 states. For more information, please visit www.barrettbusiness.com.
Liolios Group, Inc.
Source: Barrett Business Services, Inc.
Released December 15, 2014