Foothill Group Inc. said its asset-based lending unit, Foothill Capital Corp., obtained two new credit lines totaling $300 million from a group of 22 banks led by Bank of America.
The new credits replace an existing $250 million facility, also led by the BankAmerica Corp. unit, on more favorable terms.
Henry Jordan, Foothill Group's chief financial officer, said the company expects to save as much as $750,000 a year from lower fees.
A Pair of Revolvers
The borrowing rate has also been reduced by 50 basis points, to 100 basis points over the London interbank offered rate, but Foothill doesn't expect to draw on the credit lines.
Mr. Jordan said they will be used as backstops for the issuance of commercial paper.
The new credit package consists of a $200 million revolver expiring in three years, and a $100 million revolver expiring in one year.
Despite the lower pricing, Mr. Jordan said Foothill received commitments "well in excess" of its $300 million target level.
Mr. Jordan would not specify the actual amount of commitments, but they are believed to have totaled somewhere around $350 million.
Foothill's senior debt rating was recently upgraded by two credit-rating agencies to BBB-plus from BBB, which partly explains why the company was able to get lower pricing on its new bank credits.
Upgrade from Duff
But the company also benefitted from a general decline in loan pricing across the credit spectrum.
In upgrading Foothill's credit rating last month, Duff& Phelps Inc. cited the company's improved profitability and ongoing improvements in asset quality.
Based in Los Angeles, Foothill Capital provides asset-based financing to businesses on a nationwide basis. The company recently opened a loan production office in Chicago to serve its Midwest clients.
Mr. Jordan said Foothill mainly competes against other asset-based lending specialists -- such as Congress Financial -- rather than commercial banks.