Schawk, Inc. completes refinancing of its revolving credit facility
Wednesday, January 13, 2010
Press release from the issuing company
Increases facility by $10 Million to $90 million
DES PLAINES, IL - Schawk, Inc., a leading provider of brand point management services, enabling companies of all sizes to connect their brands with consumers to create deeper brand affinity, announced today the successful refinancing of its $80 million revolving credit facility.
The new $90 million senior secured revolving credit facility, which matures in July 2012, lowers the Company's current interest rate (at closing) by approximately 175 basis points for revolver-based borrowings. The facility bears interest at a rate of Libor plus a margin that varies with the Company's leverage ratio. At closing, that margin is 300 basis points. The facility also provides the Company with greater flexibility in areas such as acquisitions and the payment of cash dividends.
Additionally, the facility allows for $10 million of non-committed accordion financing to fund acquisitions as detailed under the terms of the credit agreement. The Company's previous revolving credit facility of $80 million was originally due to expire on January 28, 2010.
The outstanding amount borrowed under the former $80 million revolving credit facility at December 31, 2009 was approximately $20 million. The unutilized portion of the new $90 million facility will be used for general corporate purposes, such as working capital and capital expenditures. Additionally, together with anticipated cash generated from operations, the unutilized portion of the facility will provide financing flexibility and support in the funding of principal payments due in 2010 and succeeding years on the Company's other long-term debt obligations.
Total Company debt outstanding, inclusive of the revolving credit facility, at December 31, 2009, is approximately $77.6 million, which reflects a net debt reduction of approximately $58.2 million since December 31, 2008.
David A. Schawk, president and chief executive officer, commented, "We believe the new revolving credit facility reflects confidence in the Company's financial performance and strategic direction. Importantly, we expect the new facility to provide us with an increased ability to grow and increase shareholder value while also affording us the necessary flexibility to fund our operations. Furthermore, we are pleased that the new facility will lower the overall borrowing costs for the Company. We appreciate the strong support that we have received from our lender group."
Timothy J. Cunningham, executive vice president and chief financial officer, further commented, "We were also pleased that we received proposed commitments in excess of the total facility amount that we sought and had strong interest from new potential lenders that were not participants in the previous revolving credit facility. The Company's debt reduction activities over the last nine months of 2009 and the cost reduction initiatives over the last seven quarters have strengthened Schawk's financial position and have contributed to this successful refinancing."
The definitive revolving credit agreement, which includes the specific terms and conditions governing the Company's new credit facility, will be included in a Current Report on Form 8-K expected to be filed by the Company with the Securities and Exchange Commission on or about January 13, 2010.
J.P. Morgan Securities, Inc. led the refinancing transaction in a five-member syndicate of financial institutions which included Bank of America, JPMorgan Chase Bank N.A., PNC Bank, Wells Fargo Bank, and Wintrust Financial Corporation.
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