Compass Diversified Holdings (CODI), which owns Fox Racing Shox and CamelBak, exercised April 2 an option under a credit agreement to borrow another $30 million and reduce it borrowing costs.
The incremental term loan, arranged by TD Securities and issued at 99 percent of par value, increases the company's aggregate outstanding borrowings under its term loan facility to approximately $255 million. The increased term loan facility will require quarterly payments of approximately $640,000 with a final payment of the outstanding principal balance due in October 2017.
CODI also announced that, concurrent with the incremental term loan borrowing, it has amended the pricing terms of its term loan facility. Under the terms of the amendment, amounts borrowed bear interest at LIBOR plus a margin of 5.00 percent, as compared to the previous margin of 6.00%. In addition, the LIBOR floor was reduced to 1.25 percent from 1.50%. All other terms of the credit agreement remain unchanged. In connection with the amended facility, the company paid an amendment fee of approximately $2.25 million, equal to 1.00 percent of the outstanding portion of the term loan before the $30 million increase. CODI will utilize the net proceeds from the incremental term loan to reduce borrowings under its $290 million revolving credit facility.
“Our amended term loan facility enhances CODI's financial flexibility and lowers the company's borrowings costs,” said CODI’s CEO Alan Offenberg. “By taking advantage of a more attractive pricing environment, we expect to significantly reduce future interest expense for the benefit of the company and its shareholders. We appreciate the continued support of our lending group, which underscores our strong growth prospects as we remain focused on utilizing our substantial liquidity to consummate accretive platform acquisitions and invest in the long-term performance of our existing subsidiaries.”
