Columbus McKinnon Completes Successful Debt Refinancing

Rhea-AI Summary

Columbus McKinnon Corporation (Nasdaq: CMCO) announced a covenant-lite term loan credit agreement for $450 million, with a 7-year term. The interest rate is based on LIBOR plus 2.75%. The funds will refinance a $650 million first lien bridge loan used for previous debt and acquiring Dorner Manufacturing. The deal also includes a $100 million revolving credit facility. CFO Gregory P. Rustowicz highlighted the favorable terms, indicating strong investor interest and improved financial flexibility for growth initiatives.

Positive

• Secured $450 million in term loan credit with favorable LIBOR-based interest rates.
• Refinancing enhances financial structure and reduces debt pressure.
• Strong investor interest indicates confidence in company performance.
• CFO's projection of quicker de-leveraging to a target net leverage ratio of 2.0x.

Negative

• None.

Columbus McKinnon Corporation (Nasdaq: CMCO) (the “Company” or “Columbus McKinnon”), a leading designer and manufacturer of intelligent motion solutions for material handling, today announced that the Company has entered into a covenant-lite term loan credit agreement, providing a Term Loan B Facility (“the Facility”) of seven years in the amount of $450 million. The interest rate under the new Facility will be determined based on LIBOR plus 2.75% with a 0.5% LIBOR floor and an issue price of 99.75.

The proceeds were used to refinance the remaining amount of the existing $650 million first lien bridge loan that was funded in April 2021 to refinance the Company’s previous Term loan B and fund the acquisition of Dorner Manufacturing Corporation. The new financing also includes a $100 million, five-year revolving credit facility with a springing first-lien net leverage covenant. The remaining portion of outstanding borrowings under the Company’s first lien bridge loan has been repaid with the net proceeds of $198.2 million from its common stock offering and existing cash on hand.

Gregory P. Rustowicz, Chief Financial Officer of Columbus McKinnon, noted, “We are very pleased with the strong interest and resulting favorable terms for this new credit agreement. The facility provides a permanent capital structure that is flexible and low cost. Because of the success of our equity offering and our strong cash generation capabilities, we expect to de-lever much quicker to our target net leverage ratio of 2.0x. Importantly, we have the financial flexibility to continue to advance our organic and acquisitive growth initiatives.”

About Columbus McKinnon

Columbus McKinnon is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions that efficiently and ergonomically move, lift, position, and secure materials. Key products include hoists, crane components, precision conveyor systems, actuators, rigging tools, light rail workstations, and digital power and motion control systems. The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how.

Safe Harbor Statement

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements concerning future sales and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including the ability to generate cash and de-lever the balance sheet, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210514005503/en/

FAQ

What is the significance of Columbus McKinnon's new term loan agreement?

The new term loan agreement of $450 million allows Columbus McKinnon to refinance existing debt and improve financial flexibility.

What are the terms of Columbus McKinnon's new credit facility?

The facility has a 7-year term, with an interest rate tied to LIBOR plus 2.75%.

How much debt is Columbus McKinnon refinancing?

The company is refinancing $650 million of its first lien bridge loan.

What is Columbus McKinnon's target net leverage ratio after the new financing?

Columbus McKinnon aims to de-lever to a target net leverage ratio of 2.0x.

Did Columbus McKinnon raise capital through stock offerings?

Yes, the company raised $198.2 million from a common stock offering to assist in repaying the bridge loan.