Johnson Outdoors Inc. has refinanced and restructured the company's debt, thereby reducing estimated 2010 borrowing costs by more than 40% compared with fiscal year 2009.
The highlights of the debt refinancing include:
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
– 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, Wisconsin
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
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. 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,” said David W. Johnson, Chief Financial Officer.