Summer Infant, Inc., a global provider of premium infant and juvenile products, announced that it has executed commitment letters for an amended and extended $60.0 million asset-based revolving credit facility with Bank of America, N.A. and a $17.5 million term loan with Pathlight Capital LLC. The fully committed Credit Facility is expected to close, subject to customary conditions, in June 2018 and will provide significant incremental liquidity compared to the Company’s existing agreement.
“As we execute plans to streamline the Company, invigorate our channel strategy, and bring new products to market, we saw the need for greater financial flexibility and long-term growth capital – which this Credit Facility will ensure,” said Mark Messner, Chief Executive Officer. “We appreciate the continued support by Bank of America and are excited to partner with them and Pathlight Capital to strengthen our outlook and process improvement initiatives. The Credit Facility will provide a solid foundation for us to advance our focus on product development, brand expansion, and increased operating efficiency, as we work to accelerate top line growth and increase returns to shareholders.”
“This Credit Facility represents the culmination of many months working to construct an appropriate vehicle to take Summer Infant to the next level, and we are pleased to have had multiple financing commitments from which to choose,” added Bill Mote, Chief Financial Officer. “The new structure will streamline covenants, feature substantially lower amortization levels, and provide additional long-term liquidity for the Company.”
The $60.0 million senior revolving credit facility with Bank of America will have a five year term, with interest accruing at either LIBOR plus an applicable margin of 1.75% or 2.00%, depending on average quarterly Availability (as defined in the definitive agreement and expected to be similar to the Company’s existing credit facility with Bank of America), or the bank’s base rate plus an applicable margin of 0.75% or 1.00%, depending on average quarterly Availability. The revolving credit facility will be secured by a first priority lien on the Company’s assets, other than assets secured by the term loan. The $17.5 million term loan with Pathlight Capital will also have a five-year term and accrue interest at three-month LIBOR plus 9.00%. The term loan will be secured by a first priority lien on the Company’s intellectual property, equipment and interests in its subsidiaries and amortize at 5 percent per year, payable quarterly, beginning December 1, 2018. Proceeds from the Credit Facility will be used to refinance existing indebtedness, pay any transaction costs, and to finance ongoing working capital needs. The closing of the revolving credit facility and the term loan remain conditional upon receipt by the lenders of certain final deliverables, including the execution of definitive loan and security documentation, minimum available liquidity, and completion of any remaining diligence.
OceanArc Capital Partners LLC acted as the Company’s exclusive financial advisor for the transaction.