Compass Diversified Holdings, the parent company of Fox and Camelbak, exercised an option under its credit agreement to borrow an incremental term loan of $30 million.
“We are pleased to be able to take advantage of the favorable credit market conditions and amend our term loan facility for the second time over the past year,” said Alan Offenberg, Compass’ CEO. “Our amended term loan facility, combined with our amended revolver, further reduces Compass’ borrowing costs and enhances the Company's financial flexibility,” he added.
The incremental term loan, arranged by TD Securities and issued at par value, increases the Company's aggregate outstanding borrowings under its term loan facility to approximately $281.9 million. The increased term loan facility will require quarterly payments of approximately $0.7 million with a final payment of the outstanding principal balance due in October 2017.
Concurrent with the incremental term loan borrowing, Compass amended the pricing terms of its term loan facility. Under the terms of the amendment, amounts borrowed now bear interest at either LIBOR plus a margin of 4 percent, as compared to the previous LIBOR margin of 5 percent, or base rate plus a margin of 3 percent as compared to the previous base rate margin of 4 percent.
In addition, the LIBOR floor was reduced from 1.25 percent to 1 percent. Compass utilized $27 million of the net proceeds from the incremental term loan to reduce borrowings outstanding under its $290 million revolving credit facility. As a result, there are no current borrowings outstanding under the revolving credit facility at closing.
Compass also announced it has amended the pricing terms of its revolving credit facility, which is subject to borrowing base restrictions. Under the terms of the amendment, amounts borrowed now bear interest based on a leverage ratio defined in the credit agreement at either LIBOR plus a margin ranging from 2.5 percent to 3.5 percent.
In addition, the unused fee for the revolving credit facility was reduced from 1 percent to 0.75 percent when leverage is lower than a defined ratio and the maturity date for the revolving credit facility was extended by six months to April 2017. All other terms of the credit agreement remain unchanged.
