JAKKS Pacific refinanced its existing term loan facility with a new first lien term loan facility from Benefit Street Partners and entered into a new $67.5 million asset-based revolving credit facility with JPMorgan Chase.
The new first lien term loan facility has a principal balance of $99 million and matures in June 2027. The term loan will bear interest at a rate of LIBOR plus 6.5% to 7% (determined by reference to a net leverage pricing grid), subject to a 1% LIBOR floor. JAKKS Pacific used proceeds from the new term loan facility, together with available cash on hand, to repay its existing $128.9 million 10.5% term loan facility maturing in 2023 as well as unpaid interest and fees and expenses related to the refinancing transactions.
Under the term loan, JAKKS Pacific can draw an additional $19 million to fund the redemption of any of its 2023 convertible senior notes. The repayment of the term loan accelerates the maturity of the convertible senior notes to Sept. 1, which is 91 days from the repayment of the term loan. As of today, the outstanding convertible senior notes’ balance was $18.9 million.
The asset-based revolving credit facility from JPMorgan Chase will mature in June 2026. The new revolving credit facility replaced JAKKS Pacific’s existing $60 million revolving credit facility maturing in August 2022. Any amounts borrowed under the revolving credit facility will bear interest at a rate of LIBOR plus 1.5% to 2% (determined by reference to an excess availability pricing grid).
“We have taken proactive measures to refinance and extend our debt, which enhances our ability to invest in growth, reduces our projected interest expense by over $5 million annually and increases our overall financial flexibility with respect to covenants and liquidity,” Stephen Berman, chairman and CEO of JAKKS Pacific, said. “Today’s refinancing further positions JAKKS Pacific to continue its strong momentum as we execute on our strategy to increase margins, grow EBITDA and ultimately drive value to shareholders.”
Benefit Street Partners was also an investor and a participant in the prior term loan facility as part of JAKKS Pacific’s 2019 recapitalization.
Houlihan Lokey served as exclusive placement agent and Buchalter served as legal advisor to JAKKS Pacific in executing these transactions.
