Sport Supply Group, Inc. has retired all of its outstanding 5.75% subordinated convertible debentures. The company had $28.9 Million in outstanding convertible debentures that were repaid today via cash on-hand and borrowings underneath the company’s $40.0 million revolving credit facility.
The borrowings under the company’s credit facility bear interest, subject to consolidated leverage ratios, at LIBOR plus 1.25%. Based upon today’s LIBOR rate, the interest rate on borrowings would approximate 1.49% per annum. The company estimates that it will save approximately $2.1 Million in interest expense for the 12 months ending June 30, 2010 as compared to the 12 months ended June 30, 2009 as a result of these lower interest rates and reduced borrowings.
The company will have approximately $11.0 to $14.0 Million in debt remaining under its revolving credit facility at the end of its second fiscal quarter ending December 31, 2009, which, given current cash flow trends (and barring other potential uses of cash such as acquisitions, internal expansion and / or stock repurchases), will likely be repaid within the next 6-12 months.
Adam Blumenfeld, chairman and chief executive officer, stated: “In December 2006, Sport Supply Group had $85.6 Million in outstanding debt. We are proud to have reduced our indebtedness by more than $70 Million during the last 36 months, largely through operating cash flow. This speaks to the resiliency of Sport Supply’s business model during the most challenging of economic times. We believe there are a number of strategic opportunities within our industry and we intend to put the strength of our balance sheet to use for the benefit of all shareholders.”
The company stated, as a result of retiring its convertible debentures, the company’s diluted weighted average shares outstanding will decrease from 14.53 million shares for the quarter ending September 30, 2009 to approximately 12.55 million shares for its second fiscal quarter ending December 31, 2009.
