LPL Investment Holdings Inc., parent company of LPL Financial LLC, plans to refinance its existing senior secured credit facilities and is proposing dividends for all common stockholders.
The comany is seeking approval from its Board of Directors to declare a one-time special dividend for all common stockholders of up to $230 million (up to $2.00 per share), and a regular quarterly dividend of up to 48 cents per share annually. Funds received under the refinanced loan would not be used to fund either the proposed special dividend or regular ongoing dividends.
The proposed refinancing is projected to raise $1.35 billion and include an additional $250 million revolving loan. The refinancing would replace the existing $1.33 billion credit facility and the $163.5 million revolving loan now in place. The refinancing, set to be completed in the second quarter, is expected to strengthen LPL's capital structure by extending the maturity date and reducing the average interest expense of its current outstanding debt.
"This proposal signals our intention to establish a more permanent framework to manage our capital structure. It would involve extending our debt with a known repayment schedule, introducing a proposed regular dividend and an opportunity to return capital through a special dividend utilizing excess cash on hand," said Michael Herley, spokesperson for LPL Financial.
Management believes the proposed refinancing would preserve LPL's capacity to further invest in the business while maintaining financial flexibility. LPL's management also believes this capital structure would support the ability to pay ongoing shareholder dividends in the future and utilize cash-flow to deliver long-term sustainable growth while optimizing shareholder value.