Schawk cuts interest, boosts revolver to $90 million

Schawk Inc., a leading provider of brand point management services, said it has refinanced an increased revolving credit line at a lower interest rate.

The amendment extends the $90 million revolver's maturity to July 12, 2012, the Des Plaines-based company said in a regulatory filing. The company said it has the option to increase the credit line by $10 million.

Schawk said the loan carries an interest rate 2.5 percentage points to 3.5 percentage points more than the London interbank offered rate, based on the company's cash-flow leverage ratio. The margin is currently set at 3 percentage points.

The agreement also allows for a $10 million swing-line loan and a $10 million letter of credit, both of which count against the total for the revolver.

Previously, Schawk had an $80 million revolver due Jan. 28 that paid lenders 3 percentage points to 4.5 percentage points more than Libor, with a 2 percent floor on the benchmark, according to a June 11 agreement. Libor is the rate banks charge to lend to each other.

The refinancing reduces Schawk's current interest rate on the revolver by about 1.75 percentage points, the company said in a prepared statement.

Schawk said it already borrowed $15 million from the credit line, which will be used for working expenses and capital expenditures. The agreement, arranged by JPMorgan Chase & Co., restricts capital expenditures to no more than $18.5 million per year, or $40 million total before it expires.