Bangalore: Nasdaq-listed iGate Corp., burdened with $770 million in borrowings, has signed a $360 million debt refinancing agreement to save on interest costs.

iGate on Monday signed a new $360 million refinancing deal comprising two separate credit facilities—$270 million at an interest rate of roughly 3.5% for five years and $90 million at the rate of 2.25%.

New chief executive officer (CEO) Ashok Vemuri said the new arrangement would help it reduce interest costs by about 6% annually and help the company save over $100 million in interest costs over the next five years.

Fremont, California-based iGate also plans to decentralize decision-making in its North American business, according to Vemuri, thus overhauling the organizational structure in place under the previous chief Phaneesh Murthy.

“As a result of this, you will see certain people within the company who will bubble up and rise," Vemuri told reporters on a video conference from New Jersey. “So far, our management strength has not had the opportunity to surface, given that it has been constrained by the organizational structure."

As part of the company’s new organizational structure, Vemuri said new leaders had been promoted to head the North American verticals, after the overhaul resulted in the exits of some top-level executives. Vemuri did not name the newly-promoted executives.

iGate will also exit all markets where it does not have significant presence, such as Latin America, and focus solely on its main markets of North America and Western Europe. “We have invested in certain markets, but quite honestly those investments have been half-hearted," Vemuri said. “We’re going to stop those investments."

iGate is scrambling to ensure that it doesn’t lose its top customer Royal Bank of Canada (RBC), which was exploring handing out business to other software vendors, Mint reported on 4 July.

Vemuri said that iGate continued to work closely with RBC. “We are very comfortable with the relationship we have with them (RBC) and from what I’ve heard from them, so are they," he said.

In April, the Canadian government began an investigation into a report that said RBC, that country’s largest bank, was using temporary foreign workers from iGate to replace its own staff. The news triggered a temporary halt in fresh outsourcing projects from Canada’s banking and financial services sector.

On a post-earnings conference call in October, Vemuri had given an early glimpse of his near-term plans and said the company would create a new business segment to tap into the US healthcare outsourcing market, in the backdrop of President Barack Obama’s healthcare legislation, and make a stronger push towards high-margin consulting revenues.

Earlier this month, Vemuri also told investors that he would decentralize decision-making at the company and also look to pay off debt worth about $150-200 million.

Vemuri took over as CEO of iGate in September after a 15-year stint with India’s second largest software exporter Infosys Ltd. His predecessor Murthy—another Infosys veteran—was sacked in May for failing to disclose a relationship with a subordinate employee.

After Murthy’s departure in May, iGate had struggled to find a replacement for nearly four months, after several candidates who were interviewed for the top job declined to take up the position, citing concerns over the company’s huge debt, unsettled tax claims, and lawsuits filed against it. At least three of these candidates had spoken to Mint on condition of anonymity as these discussions were private.

“It’s still too early to say whether the worst is behind iGate on the basis of the last two quarters," said Rajat Juneja, a practice director at outsourcing advisory firm Everest Group. “The momentum that you saw in the last few quarters was there at the time Phaneesh Murthy left and during the same time, most IT (information technology) service providers have done well, given the pick-up in the demand environment. Vemuri’s challenge is to ensure they get more revenues from other regions, and are not over-reliant on one or two big customers."

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