J.P. Morgan acted as lead arranger, lead bookrunner and administrative agent for a $275 million, six-year senior secured term loan B facility due June 2026 and a $100 million, three-year, ABL revolving credit facility due June 2023 for Douglas Dynamics. The facilities refinance Douglas Dynamics’ existing senior secured credit facilities. Douglas Dynamics will use the proceeds from the borrowings for general corporate purposes, including repaying the entirety of the company’s prior $226 million term loan B facility that was scheduled to mature on Dec. 31, 2021.
“In addition to extending our debt maturities, this refinancing transaction provides us with what we believe is the right capital structure, enhances our liquidity and reinforces our robust financial position,” Sarah Lauber, CFO of Douglas Dynamics, said. “The strong interest and commitments we received during the refinancing process meant we were able to finalize with favorable terms, which is particularly important in the current economic environment.”
The new term loan B facility is priced at LIBOR plus 3.75% (subject to a 1% LIBOR floor), does not contain a financial maintenance covenant and includes similar restrictive covenants as the company’s prior term loan B facility. The new revolving credit facility is initially priced at LIBOR plus 2% (subject to a 1% LIBOR floor), and the applicable margin is subject to periodic adjustment based on a pricing grid ranging from 1.75% to 2.25% depending on the company’s average daily excess availability under the facility. The new revolving credit facility is subject to a borrowing base and includes similar restrictive covenants as the company’s prior revolving credit facility, including a springing minimum fixed charge coverage ratio covenant, which is triggered when the company’s excess availability under the facility is below a specified level.
Douglas Dynamics also completed the planned restart of operations at all of its 20 facilities in May. In addition, approximately 99% of furloughed employees rejoined the company. The company expects that its remaining employees will be able to rejoin the company in the near future.
“We were able to successfully execute our operational restart during May as planned, while maintaining the health and safety of employees and partners as our highest priority,” Bob McCormick, president and CEO of Douglas Dynamics, said. “Thanks to the dedication and ingenuity of our associates and the significant amount of planning and preparation undertaken during the pandemic-related shutdown, we quickly and safely adapted and then reopened our facilities.”
Foley & Lardner acted as legal counsel to Douglas Dynamics.
Douglas Dynamics is a North America manufacturer and upfitter of commercial work truck attachments and equipment.
