First American Refinances Its Debt

SANTA ANA —  For the second consecutive year, First American Financial Corp. has refinanced a major portion of its debt to take advantage of lower interest rates and better terms.

The title insurance company said Monday that it has amended the terms of a $65-million debt refinancing deal, a move that is expected to save $800,000 in interest payments in the first year.

First American, based in Santa Ana, sought the amendment on a refinancing deal put together in April, 1992. At that time, the company borrowed $65 million from a consortium of banks led by Chase Manhattan and used the proceeds to retire senior debt and unsecured bank notes.

Of the $65 million, $10 million was at fixed rates of 9.38% and the rest was at a variable rate. If interest rates remain at today’s levels, First American estimates that it will save $2 million over the remaining five-year life of the loan.

The refinancing deal will give First American more options in seeking lower interest rates. Instead of having to accept its present rate of prime plus three quarters of 1% on its variable-rate debt, First American will have the option to choose the London Interbank Offered Rate plus 2%, or Chase’s prime rate. The London Interbank rate, known as the LIBOR rate, is the one that the most credit-worthy international banks charge each other.

First American shares fell 25 cents Monday to close $25.50 in NASDAQ trading.