Summer Infant Closes on New $77.5 Million Financing to Fuel Growth Initiatives
Company Accelerates Strategic Projects to Grow Revenue and Increase Efficiencies; Sequential Revenue Growth Expected for Second Quarter
WOONSOCKET, R.I., June 28, 2018 (GLOBE NEWSWIRE) -- Summer Infant, Inc. ("Summer Infant" or the "Company") (NASDAQ:SUMR), a global leader in premium infant and juvenile products, today announced that it has completed closings on a $60.0 million asset-based revolving credit facility with Bank of America, N.A. (BofA) and a $17.5 million term loan with Pathlight Capital LLC (together, the “Credit Facility”). The fully committed Credit Facility provides incremental liquidity and more flexible covenants compared to the Company’s existing agreements.
“Our new Credit Facility provides us with the financial flexibility needed to capitalize on the increasing demand for our new products, build traction in key distribution channels, and facilitate the execution of our long term growth strategy,” said Mark Messner, Chief Executive Officer of Summer Infant. We are gratified that our financing partners in Bank of America and Pathlight Capital, both very familiar with the consumer products and retailing sectors, have demonstrated their support of our continued success and share our enthusiasm for the trajectory of our growth prospects for revenues as well as profitability.”
“We are very pleased to have materially strengthened our capital structure and bolstered our liquidity, which are competitive advantages in today’s retail environment,” added Bill Mote, Chief Financial Officer. “The new Credit Facility provides near and long-term liquidity enhancements as well as other benefits to assist in delivering improvements in our overall financial performance. Our debt service costs have been reduced while allowing for increased levels of working capital with second quarter sales tracking toward meaningful sequential growth from the first quarter. We are now well positioned to focus on our organic growth initiatives, including product development, brand expansion, and increased operating efficiencies.”
The $60.0 million senior revolving credit facility with BofA will have a five year term maturing on June 28, 2023, with interest accruing at the Company’s option of either LIBOR plus an applicable margin of 1.75% or 2.00%, depending on average quarterly Availability (as defined in the definitive agreement), or the bank’s base rate plus an applicable margin of 0.75% or 1.00%, depending on average quarterly Availability. In addition, the BofA Agreement has a $5 million letter of credit sub-line facility. As of June 28, 2018, the base rate on loans was 6.0% and the LIBOR rate was 4.125%. 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%. As of June 28, 2018, the interest rate on the Term Loan was 11.336%. The term loan will be secured by a first priority lien on the Company’s intellectual property, equipment and interests in its subsidiaries and a second priority lien on the revolving credit facility assets, and amortize at 5.0% 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 Company’s prior credit facility had totaled $75.0 million, with a blended average interest rate in the first quarter of 2018 of 5.0%.
OceanArc Capital Partners LLC acted as the Company’s exclusive financial advisor for the transaction.
About Summer Infant, Inc.
Based in Woonsocket, Rhode Island, the Company is a global leader of premium infant and juvenile products 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. For more information about the Company, please visit www.summerinfant.com.
Forward-Looking Statements
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases, including "expects," "expected," "will," "would," "could," "intends," "believes," "anticipates," "future," and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of the Company's management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this press release, statements relating to our expectations for future growth, the impact of the financing on near and long-term liquidity and improvements in financial performance, future working capital demands, and sequential growth in the second quarter of fiscal 2018. among others, are forward-looking statements. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the risk that we are unable to refinance our existing credit agreement or do so on terms that are more detrimental to us than the terms described in this press release and the risk that we require greater liquidity than we expect during the refinancing process and following the closing, if the refinancing is consummated. Readers should review and consider these and other factors that could impact results as provided in various disclosures by the Company in its press releases, stockholder reports, and filings with the SEC, including its Annual Report on Form 10-K filed with the SEC on February 20, 2018.
Company Contact:
Chris Witty
Investor Relations
646-438-9385
cwitty@darrowir.com
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