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Generac Refinances Term Loan; Extends $150MM ABL

June 04, 2013, 09:04 AM
Filed Under: Manufacturing

Generac Holdings, a designer and manufacturer of generators and other engine powered products, has completed the previously disclosed amendment and restatement of its senior secured term loan credit facility on May 31, 2013, pursuant to which it has incurred $1.2 billion of senior secured term loans to replace its prior term loan facilities. The new term loans will mature in 2020, with interest initially accruing at LIBOR plus 2.75% with a LIBOR floor of 0.75%. Beginning in the second quarter of 2014, the spread to LIBOR of the new term loans can be reduced to LIBOR plus 2.50% to the extent that the Company's net debt leverage ratio falls below 3.0 times.

An SEC filing from May 31 lists JPMorgan Chase Bank as adminstrative agent and Bank of America, N.A. and Goldman Sachs Bank USA, as syndication agents.

Additionally, the company has obtained a one-year extension of the maturity date of its existing $150 million senior-secured, asset-based revolving credit facility. The extended revolving credit facility will terminate in 2018, and will continue to accrue interest on drawn proceeds using an availability-based pricing grid starting at LIBOR plus 2.0%.

As previously announced, the company intends to use a portion of the proceeds from the new term loans to fund a special cash dividend to its stockholders of $5.00 per share, or approximately $342 million in the aggregate. After paying off the outstanding principal and accrued interest on the prior term loan facilities, the remaining funds from the new term loans will be used for general corporate purposes and to pay related financing fees and expenses.

Following the closing of the new senior secured term loan facility and related borrowings thereunder, on May 31, 2013, the company’s Board of Directors declared the special cash dividend of $5.00 per share. T

As a result of the closing on the $1.2 billion of senior secured term loans, the Company is updating its guidance for interest expense for the full-year 2013. Interest expense is now expected to be in the range of $55.0 to $57.0 million, which includes $50.0 to $51.0 million of debt service costs, at current LIBOR rates, plus $5.0 to $6.0 million for deferred financing cost and original issue discount amortization. Interest expense during the third quarter of 2013, the first full quarter under the new capital structure, is expected to be approximately $13.0 million, which includes approximately $2.0 million of deferred financing costs and original issue discount amortization.

View the SEC filing from May 31, 2013.

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