Johnson Outdoors Inc. has entered into a short-term, interim agreement which modifies provisions of the company’s existing debt agreements dated Oct. 7, 2005 and Feb. 12, 2008.
“Our current debt agreements never could have foreseen the dramatic downturn in the economy and the impact it would have on our industry,” said CFO David W. Johnson. “We are working closely with our lenders on a long-term debt facility that may lead to increased borrowing costs in the future.”
On Oct. 13, 2008, JOUT and some of its subsidiaries entered into an Omnibus Amendment that took effect Oct. 3 and covers existing debt agreements with JPMorgan Chase Bank N.A and other lenders.
The Amendment includes a “Security Agreement” granting the lenders a security interest in certain inventory and accounts receivable assets of JOUT and some of its subsidiaries. The material changes to the company’s existing debt agreements include:
Resetting the applicable margin on the company’s LIBOR based debt to 3.25%.
Modification of certain financial and non-financial covenants, including modifying the restriction on the company’s ability to increase the amount or frequency of dividends and limiting the company’s ability to effect acquisitions without the consent of the lenders to acquisitions involving aggregate consideration of no more than $2 million dollars.
Restating certain financial ratios that the company must comply with, including the maximum leverage ratio which cannot exceed 5.0 to 1.0 and the minimum fixed charge coverage ratio which cannot be less than 1.75 to 1.0 for the quarter ending on Oct. 3, 2008.
Modification of the definition of consolidated EBITDA to exclude certain non-cash items.
