Turning Point Brands, a provider of Other Tobacco Products (OTP) through brands such as Zig-Zag, Stoker’s, VaporBeast and Primal, entered into a new $250 million credit facility, replacing its existing credit facility.

President and CEO Larry Wexler said, “This new facility provides us with greater flexibility in the execution of our growth and acquisition strategy, reduces our interest expense, hedges a portion of our debt structure against a rising rate environment and reduces the administrative burden and costs associated with our former credit facility.”

The $250 million credit facility is comprised of two tranches. The first lien tranche includes a $50 million five-year revolving credit facility, a $110 million “first out” five-year term loan facility, and a $35 million “second out” five and one-quarter-year term loan facility.

The first lien tranche includes a $40 million accordion feature. The second lien tranche consists of a $55 million five and one-half-year term loan. All of the term loans were fully drawn at closing, and the revolving credit facility was partially drawn at closing. Proceeds from the new credit facility were used to retire TPB’s existing credit facilities and pay transaction expenses in connection with the refinancing.

Loans under the first lien revolving credit facility and the “first out” term loan bear interest at LIBOR plus 2.5% to 3.5% based on TPB’s senior leverage ratio, and the first lien second out term loan bears interest at LIBOR plus 6.0%. The second lien term loan bears interest at a fixed rate of 11.0%. The credit agreement contains conditions to funding, representations and warranties, affirmative covenants, negative covenants and facility fees that are customary for credit facilities of this type. TPB intends to use available funds under the revolving credit facility for general corporate purposes, which may include working capital needs, capital expenditures, potential acquisitions, and organic growth strategic initiatives.

The new credit facility was arranged by Fifth Third Bank, Capital One and Regions Capital Markets.