Generac Refinances Credit Facility, Enters Into Asset-Based Loan
Generac Holdings Inc., a designer and manufacturer of generators and other engine powered products, announced that it has completed the previously disclosed amendment and restatement of its existing senior secured credit facilities, pursuant to which it has incurred $900 million of senior secured term loans to replace its existing $575 million term loan facilities.
Additionally, the company has obtained a separate $150 million asset-based revolving credit facility to replace its existing $150 million unfunded revolving credit facility.
The new term loans will mature in 2018, with interest accruing at LIBOR plus 5.0% with a LIBOR floor of 1.25%. The new revolving credit facility will terminate in 2017 and interest will accrue on drawn proceeds using an availability-based pricing grid starting at LIBOR plus 2.0%. As previously announced, the company intends to use the remaining proceeds from the new term loans and cash on hand to fund a special cash dividend to its stockholders of $6.00 per share, or approximately $408 million in the aggregate, and to pay related financing fees and expenses.
Following the closing of the new senior secured credit facility and related borrowings thereunder, the company’s Board of Directors declared the special cash dividend of $6.00 per share. The special cash dividend is payable to stockholders of record on June 20, 2012 and will be paid on June 29, 2012. We have been informed by the New York Stock Exchange that the ex-dividend date is expected to be July 2, 2012, in accordance with its rules. Shareholders of record on the record date who sell their shares on or before the payment date will not receive the special cash dividend.
As a result of the closing on the $900 million of senior secured term loans, the company is updating its guidance for interest expense for the full-year 2012. Interest expense is now expected to be in the range of $49.0 to $50.0 million, which includes $45 million to $46 million of debt service costs, at current LIBOR rates, plus approximately $4 million for deferred financing cost and original issue discount amortization for the new credit facility. Interest expense during the third quarter of 2012, the first full quarter under the new capital structure, is expected to be approximately $17.2 million, which includes approximately $1.4 million of deferred financing costs and original issue discount.