RACINE, Wis. – Johnson Outdoors Inc. (Nasdaq: JOUT), a global outdoor recreation company, has refinanced and restructured the company’s debt, thereby reducing estimated 2010 borrowing costs by more than 40 percent compared with Fiscal Year 2009, it reported in a statement yesterday.
The highlights of the debt refinancing, according to the company, include:
Total debt availability of up to $84.9 million through two new credit facilities secured primarily by the Company’s U.S. assets. All related loan agreements have been signed and closed.
A revolving credit facility that provides financing of up to $69 million, which matures in 2012 with availability based on eligible account receivables and inventory. The facility is reduced to $46 million from mid-July to mid-November, consistent with the company’s reduced working capital needs throughout that period, and requires an annual seasonal pay down to $25 million for 60 days. PNC Capital Markets is the lead agent of four participating lenders in this short-term facility.
A long-term facility that provides up to $15.9 million, which matures in 15 to 25 years and is guaranteed in part by a USDA Rural Development program. Ridgestone Bank of Brookfield, Wis., arranged the term loan.
Both credit facilities bear interest on a floating rate basis. The interest rate on the revolving credit facility is based primarily on LIBOR plus 3.25 percent with a minimum LIBOR floor of 2.0 percent. Interest on $9.3 million of the long-term facility is based on the prime rate plus 2.0 percent, and the remainder on prime rate plus 2.75 percent. Both compare favorably to the interest rate on the company’s previous financing agreement, which was based on LIBOR plus 5.0 percent and a minimum LIBOR floor of 3.5 percent.
The company anticipates completion on a loan agreement within the next 30 days related to its Canadian assets, which would provide up to $6.0 million in additional debt availability through a revolving credit facility. Upon completion of the Canadian credit facility, the company’s combined revolving credit facilities will provide a total of up to $75 million in financing which is reduced to a total of $50 million from mid-July to mid-November; and, the company’s total debt availability will be $90.9 million.
The restructured debt significantly reduces the company’s borrowing costs, from approximately $5.8 million in Fiscal Year 2009 to an estimated $3.3 million in 2010.
One-time costs of $1.2 million to be paid at closing.
Financial covenants for the two facilities are largely congruent and allow the company the flexibility needed to execute its strategic plan.
The new financing structure replaces the company’s current amended credit agreements, which were arranged by JP Morgan Chase and would have matured in 2010.
“We have been working diligently with lenders on an improved debt structure that better reflects our seasonal needs and stronger balance sheet, and we are pleased to have completed such a comprehensive debt restructuring in a very challenging refinancing market,” said CFO David W. Johnson. “Our ability to do so indicates the confidence of our lenders in our commitment to continue doing the right things to ensure sustained profitable growth going forward.”
Johnson Outdoors designs, manufactures and markets a portfolio of consumer brands across four categories: watercraft, marine electronics, diving and outdoor equipment. Its brands include, among others: Old Town canoes and kayaks; Ocean Kayak and Necky kayaks; Carlisle and Lendal paddles; Extrasport personal flotation devices; Minn Kota motors; Cannon downriggers; Humminbird fishfinders; Geonav marine electronics; SCUBAPRO UWATEC and Seemann dive equipment; Silva compasses; Tech4O digital instruments; and Eureka! tents.
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