WEX announces plans for potential debt repricing

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By Staff

WEX Inc. (NYSE: WEX) scheduled a meeting Monday, June 12, with certain prospective lenders to consider a potential repricing of the company’s existing $438 million term A loan and $1.191 million term B loan.

In written responses to several questions posed by Mainebiz, WEX Treasurer Michael Thomas said 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, he added, is that if the repricing initiative is successful it should allow WEX to pay down debt faster, since it would be paying less interest than if it didn’t pursue that option.

“We can’t predict the rate, or benefit, that we will get at this time,” he said. “We plan to close in early July.”

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.

“We are seeing strong demand right now,” Christina Padgett, an analyst at Moody’s Investor Service, told the Financial Times. “We are seeing companies wanting to go to market because demand is strong and pricing is still attractive. And that may not persist.”

At 3:45 p.m. MarketWatch reported that WEX shares were selling at $106.82, up more than $1 per share from Monday’s opening price of $105.58 and up $1.67 from the previous close of $105.15.