LPL Financial Announces Completion of Senior Secured Debt Repricing
September 21 2017 - 5:00PM
LPL Financial Holdings Inc. (NASDAQ:LPLA) today announced that its
wholly owned subsidiary, LPL Holdings, Inc. (“LPL Holdings”), has
completed the previously announced repricing of its senior secured
credit facilities under its existing credit agreement, reducing the
spread on its Senior Secured Term Loan B to 225 basis points over
LIBOR from a spread of 250 basis points over LIBOR and reducing the
spread on its Revolving Credit Facility to a range of 125 basis
points to 175 basis points over LIBOR from a spread of 150 basis
points to 200 basis points over LIBOR, depending on the secured net
leverage ratio of LPL Holdings and its restricted subsidiaries.
At the same time, LPL Holdings reduced the outstanding
principal amount of its Senior Secured Term Loan B by $200 million
to $1,500 million with proceeds from its previously announced $400
million add-on notes offering that was completed today. The
add-on notes carry a yield-to-worst of 5.115%. In addition,
the tenor on both LPL Holdings’ Senior Secured Term Loan B and
Revolving Credit Facility were increased by 6 months to 7 years and
5 years, respectively, from the effective date of the repricing
amendment.
LPL Holdings’ total credit facilities are summarized in the
following table:
|
Outstanding Principal Amount (dollars in
thousands) |
Current Applicable Margin |
Yield At Issuance |
Maturity |
Revolving
Credit Facility Loans(a) |
$ |
— |
LIBOR +
150 bps(f) |
|
9/21/2022 |
Senior
Secured Term Loan B(b) |
|
1,500,000 |
LIBOR +
225 bps(f) |
|
9/21/2024 |
2025
Senior Unsecured Notes(c)(d) |
|
500,000 |
5.750%
Fixed |
5.750 |
% |
9/15/2025 |
2025
Senior Unsecured Notes(c)(e) |
|
400,000 |
5.750%
Fixed |
5.115 |
% |
9/15/2025 |
Total |
$ |
2,400,000 |
|
|
|
(a) The Revolving Credit Facility consists of aggregate
principal committed amount of $500 million, and was undrawn at
closing. Loans, if any, will bear interest at a floating
rate, which in the case of LIBOR loans will be LIBOR plus 125-175
basis points per annum, depending on the secured net leverage ratio
of LPL Holdings and its restricted subsidiaries. (b) The Senior
Secured Term Loan B was issued with 25 basis points of original
issue discount and has no leverage or interest coverage maintenance
covenants. (c) The 2025 Senior Unsecured Notes were issued in two
separate transactions. $500 million in notes were issued in
March 2017 at par with a yield to maturity of 5.750%. The
remaining $400 million were issued in September 2017 and priced at
103.0% of the aggregate principal amount, plus accrued interest
from September 15, 2017, resulting in a yield to worst of
5.115%.(d) The 2025 Senior Unsecured Notes have no leverage or
interest coverage maintenance covenants.(e) The add-on 2025 Senior
Unsecured Notes have no original issue discount, and have no
leverage or interest coverage maintenance covenants.(f) The LIBOR
option is one-, two-, three- or six-month LIBOR, as selected by LPL
Holdings, or, with the approval of the applicable lenders,
twelve-month LIBOR or the LIBOR for another period acceptable to
the Administrative Agent (including a shorter period). LIBOR
is subject to an interest rate floor of 0%.
LPL Holdings incurred approximately $10 million of debt issuance
costs, including original issue discount on the Senior Secured Term
Loan B. Approximately $9 million of the debt issuance costs are
expected to be capitalized and amortized over the life of the debt
and approximately $1 million are expected to be expensed in Q3
2017. LPL Holdings also expects to incur approximately $2
million in accelerated amortization expense in Q3 2017 related to
prior debt issuance costs.
The repricing of the senior secured credit facilities was
managed by an arranger group of nine banks led by JPMorgan Chase
Bank, N.A.
Forward-Looking StatementsStatements in this
press release regarding the future amortization of debt issuance
costs, as well as any other statements that are not related to
present facts or current conditions or that are not purely
historical, constitute forward-looking statements. These
forward-looking statements are based on LPL Holdings’ historical
performance and its plans, estimates, and expectations as
of September 21, 2017. The words “expects” and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. Forward-looking statements are not guarantees
that the future results, plans, intentions, or expectations
expressed or implied will be achieved. Matters subject to
forward-looking statements involve known and unknown risks and
uncertainties, including economic, legislative, regulatory,
competitive, and other factors, which may cause actual results, or
the timing of events, to be materially different than those
expressed or implied by forward-looking statements. Important
factors that could cause or contribute to such differences include
the amount of debt issuance costs and application of relevant
accounting guidance to such costs. Forward-looking statements in
this press release should be evaluated together with the risks and
uncertainties that affect the business of LPL Financial Holdings
Inc. (together with its subsidiaries, the “Company”), including the
risk factors set forth in Part I, “Item 1A. Risk Factors” in the
Company's 2016 Annual Report on Form 10-K, as may be amended or
updated in the Company's Quarterly Reports on Form 10-Q or
subsequent filings with the SEC. Except as required by law,
the Company specifically disclaims any obligation to update any
forward-looking statements as a result of developments occurring
after the date of this press release, even if its estimates change,
and you should not rely on statements contained herein as
representing the Company's views as of any date subsequent to the
date of this press release.
About LPL FinancialLPL Financial LLC, a wholly
owned subsidiary of LPL Financial Holdings Inc. (NASDAQ:LPLA), is a
leader in the retail financial advice market and served
approximately $551 billion in brokerage and advisory assets as of
August 31, 2017. LPL is one of the fastest growing RIA custodians
and the nation's largest independent broker/dealer (based on total
revenues, Financial Planning magazine June 1996-2017), and the firm
and its financial advisors were ranked No. 1 in net customer
loyalty in a 2016 Cogent Reports™ study. The Company provides
proprietary technology, comprehensive clearing and compliance
services, practice management programs and training, and
independent research to more than 14,000 financial advisors and
over 700 financial institutions, enabling them to provide a range
of financial services including wealth management, retirement
planning, financial planning and other investment services to help
their clients turn life's aspirations into financial realities. As
of June 30, 2017, financial advisors associated with LPL served
more than 4 million client accounts across the U.S. as well as an
estimated 46,000 retirement plans with an estimated $138 billion in
retirement plan assets. Additionally, LPL supports approximately
3,700 financial advisors licensed and affiliated with insurance
companies with customized clearing, advisory platforms, and
technology solutions. LPL Financial and its affiliates have more
than 3,400 employees with primary offices in Boston, Charlotte, and
San Diego. For more information, visit www.lpl.com.
Securities and Advisory Services offered through LPL Financial.
A Registered Investment Advisor, Member FINRA/SIPC.
Investor Relations - Chris Koegel, (617) 897-4574Media Relations
- Jeff Mochal, (704) 733-3589
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