NewStar Amends Credit Facility to Increase Size to $175 Million and Extend Maturity
More Lending Capacity - Increased size of Wells Fargo led credit facility by $25 million to $175 million with accordion feature that provides flexibility for further increase to $200 million
Diversified Funding Sources - New lender further diversifies funding sources
Extended Revolving Period - Extended revolving reinvestment period by three years to November 2015
Matches Duration - Credit facility matures in five years, amortizing over two years following the expiry of the reinvestment period, which effectively matches the projected duration of loan collateral
- Short-term Funding Flexibility - Amendment increases a sublimit for additional short-term funding capacity that will be used to replace existing funding capabilities provided through a short-term credit facility from Natixis that expires in December 2012
BOSTON, Nov. 5, 2012 (GLOBE NEWSWIRE) -- NewStar Financial Inc., a specialized commercial finance company, announced today that it has amended its existing credit facility with Wells Fargo to increase its size by $25 million to $175 million and extend its reinvestment period and final maturity by three years among other things. The credit facility will be used to provide additional new lending capacity to support growing middle market loan volume originated by NewStar's Leveraged Finance group.
The increase brings total warehouse borrowing capacity to $675 million, which is expected to satisfy the company's short-term funding requirements for loan growth through 2013. The hybrid structure of the credit facility combines features of a traditional warehouse financing with the benefits of a term-debt securitization. The credit facility has a three-year reinvestment period, during which time advances may be drawn, repaid and redrawn. Borrowings under the credit facility are to be repaid over the five-year term of the loan, which matures in November 2017, matching the projected duration of the underlying loan collateral. Advances under the credit facility are secured primarily by middle-market, first-lien senior secured corporate loans. Advance rates under the credit facility range from 65% to 70% based on the type of eligible loan collateral. The facility may be prepaid and, although, it is expected to be refinanced through the issuance of CLO notes, may be used to fund loan collateral through maturity if securitization markets are unsupportive.
Wells Fargo Securities syndicated the credit facility and serves as Administrative Agent.
"Our ability to attract new lenders and increase our credit lines reflects the quality of NewStar's credit performance and track record, as well as the strength of the company's origination capabilities across our specialized lending businesses," said NewStar CEO, Tim Conway. "Wells Fargo has been a valued partner for NewStar since our inception and we are excited to continue building on our relationship," he added.
John Frishkopf, NewStar's Treasurer, also noted that "not only are we extending the reinvestment period and maturity, but we are also bringing in a new lender in order to expand the credit facility while also broadening our banking relationships."
This press release contains forward-looking statements, including statements regarding NewStar's application of the net proceeds from the warehouse facility; projected duration of loan collateral underlying the warehouse facility; and the ability of NewStar to meet its expected short-term funding requirements for 2012. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those results indicated in the forward-looking statements include uncertainties relating to future events that could affect its intended application of net proceeds and market conditions that could affect its underlying loans and ability to fund loan growth.
About NewStar Financial, Inc.:
NewStar Financial (Nasdaq: NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing a range of senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $30 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, Philadelphia PA, Portland OR, San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.
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