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Bank of America Agents $75MM Facility for Summer Infant

April 23, 2015, 08:04 AM
Filed Under: Manufacturing

Summer Infant, Inc. announced that it has completed a restructuring of its debt to include a $60 million revolving credit facility, a $5 million "first in last out" (FILO) facility and $10 million term loan facility, replacing the $80 million revolving credit facility and $15 million term loan in place since February, 2013.

"We're very pleased to announce the closing of these new credit facilities, which illustrate the confidence our bank group has in Summer Infant, resulting in both increased flexibility and significantly lower interest expense," said Carol Bramson, Chief Executive Officer. "By reducing the total size of our revolver, we will lower our facility fees while still having access to incremental availability, if needed, through a $15 million accordion feature. In addition, we expect modified covenants and reporting requirements to result in lower administrative costs and support our drive to reduce inventory levels. The new agreement is indicative of our strengthening outlook and is better suited to the future of Summer Infant, bolstering our balance sheet and improving the bottom line."

The asset-based revolver will initially bear interest at a rate equal to LIBOR plus 225 basis points and the FILO facility will bear interest at a rate equal to LIBOR plus 400 basis points. The new term loan facility will initially bear interest at a rate equal to LIBOR plus 400 basis points, as compared to the prior term loan interest rate of 11.25%. The facilities are secured by substantially all of the Company's assets and include covenants related to a maximum leverage ratio as well as customary affirmative and negative covenants. One-time cash expenses of approximately $1.0 million, to be recognized in the second quarter of fiscal 2015, were incurred to consummate this agreement and replace the prior facilities. However, the new debt is expected to save Summer Infant approximately $1.0 million in interest expense annually, or $0.04 per share.

Bank of America, N.A. served as the administrative agent for the lenders of these facilities, and Merrill Lynch, Pierce, Fenner & Smith served as lead arranger and book manager. East Wind Advisors served as financial advisor to Summer Infant, Inc.

Based in Woonsocket, Rhode Island, the Company is a global leader of premium juvenile products for ages 0-3 years which are sold principally to large North American and international retailers. The company currently sells proprietary products in a number of different categories including nursery audio/video monitors, safety gates, durable bath products, bed rails, nursery products, strollers, booster and potty seats, swaddling blankets, bouncers, travel accessories, highchairs, swings, and infant feeding products.

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