Daktronics, a manufacturer of digital signage, closed on a three-year, $75 million senior secured credit facility with JPMorgan Chase. In addition, Daktronics closed a $25 million convertible debt financing agreement with shareholder Alta Fox Capital Management.
The credit facility with JPMorgan Chase replaced Daktronics’ $35 million credit facility with U.S. Bank. As a result, JPMorgan Chase is now the company’s primary commercial bank. At close, all obligations to U.S. Bank under the previous credit arrangement were repaid, but Daktronics did not need to borrow under the new facility to fund the repayment.
The new facility provides for a $60 million revolver commitment and a $15 million delayed-draw term loan commitment. Both facilities will mature on May 11, 2026. Interest on the outstanding amounts will be paid quarterly, and the term loan will amortize on a 10-year schedule, with the full amount due upon maturity. Interest on the revolving borrowings accrues at a floating rate of SOFR plus 2.5% to 3.5%, and the term loan accrues interest at a floating rate of SOFR plus 3.5% to 4.5%. The loans are also subject to other usual and customary covenants (including debt, lien, distribution and investment restrictions). Drawing on the delayed-draw term loan is subject to completion of certain company real estate related conditions.
“We are pleased to have delivered on our commitment to identify attractive financing for the company, which was the result of a comprehensive process,” Howard I. Atkins, chair of the strategy and financing review committee for Daktronics’ board, said. “The committee is confident we and our advisors thoroughly explored all alternatives and obtained the best possible outcome in terms of flexibility and overall cost of capital. The new senior debt facility and the junior capital financing provide the company the financial resources to serve our customers and build long-term value for our shareholders.”
“Daktronics continues to make positive progress on several fronts. In addition to the financial flexibility these new sources of capital provide, the management team continues to implement operational and productivity improvement initiatives intended to increase the company’s profit margins and generate additional cash from operations,” Reece Kurtenbach, chairman and CEO of Daktronics, said. “We appreciate and are looking forward to developing our new primary banking relationship with JPMorgan Chase, a leading financial services firm with unmatched global capabilities and deep expertise in corporate finance. We also appreciate that Alta Fox has demonstrated its confidence in Daktronics’ path forward by committing additional capital to the company. Alta Fox has been a collaborative partner and we thank them for their support.”
“We are pleased to be able to provide capital to Daktronics to help support the company’s promising future. We originally invested in Daktronics because we believe the company has a leading position in an industry with significant secular tailwinds and meaningful earnings growth,” Connor Haley, founder and managing partner at Alta Fox, said. “With the company’s financial position now significantly improved, we look forward to continuing to work constructively with the board and management team to unlock meaningful value for all Daktronics stakeholders.”
Jefferies served as financial advisor and Vinson & Elkins and Winthrop & Weinstine served as legal counsel to Daktronics throughout the process of closing these transactions.