Generac Holdings Inc. GNRC, a leading designer and
manufacturer of generators and other engine powered products, announced today
that it has completed the previously disclosed amendment and restatement of
its senior secured term loan credit facility on May 31, 2013, pursuant to
which it has incurred $1.2 billion of senior secured term loans to replace its
prior term loan facilities. The new term loans will mature in 2020, with
interest initially accruing at LIBOR plus 2.75% with a LIBOR floor of 0.75%.
Beginning in the second quarter of 2014, the spread to LIBOR of the new term
loans can be reduced to LIBOR plus 2.50% to the extent that the Company's net
debt leverage ratio falls below 3.0 times.
Additionally, the Company has obtained a one-year extension of the maturity
date of its existing $150 million senior-secured, asset-based revolving credit
facility. The extended revolving credit facility will terminate in 2018, and
will continue to accrue interest on drawn proceeds using an availability-based
pricing grid starting at LIBOR plus 2.0%.
As previously announced, the Company intends to use a portion of the proceeds
from the new term loans to fund a special cash dividend to its stockholders of
$5.00 per share, or approximately $342 million in the aggregate. After paying
off the outstanding principal and accrued interest on the prior term loan
facilities, the remaining funds from the new term loans will be used for
general corporate purposes and to pay related financing fees and expenses.
Following the closing of the new senior secured term loan facility and related
borrowings thereunder, on May 31, 2013, the Company's Board of Directors
declared the special cash dividend of $5.00 per share. The special cash
dividend is payable to stockholders of record on June 12, 2013 and will be
paid on June 21, 2013. The Company has been informed by the New York Stock
Exchange that the ex-dividend date is expected to be June 10, 2013, in
accordance with its rules.
As a result of the closing on the $1.2 billion of senior secured term loans,
the Company is updating its guidance for interest expense for the full-year
2013. Interest expense is now expected to be in the range of $55.0 to $57.0
million, which includes $50.0 to $51.0 million of debt service costs, at
current LIBOR rates, plus $5.0 to $6.0 million for deferred financing cost and
original issue discount amortization. Interest expense during the third
quarter of 2013, the first full quarter under the new capital structure, is
expected to be approximately $13.0 million, which includes approximately $2.0
million of deferred financing costs and original issue discount amortization.
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