Valassis Communications Inc. (VCI) announced that it has signed an 18-month forward-starting interest rate swap agreement with JPMorgan Chase Bank, National Association as the counterparty, for an initial notional amount of $300.0 million.
The company entered into the swap agreement to fix the interest rate for $300.0 million of its variable rate debt under its senior secured credit facility effective December 31, 2010, which is the expiration date of the company's existing interest rate swap agreements. The notional amount of $300.0 million amortizes by $40.0 million at the end of each quarter to $100.0 million for the quarter ended June 30, 2012. The swap agreement terminates on June 30, 2012.
Under the swap agreement, the company is required to make payments at a fixed three-month LIBOR interest rate of 2.005%, plus an applicable margin of 1.75%, for an effective rate of 3.755% per annum to the counterparty on an initial notional amount of $300.0 million in exchange for receiving variable payments based on the three-month LIBOR rate for the same notional amount.
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