Griffon Corporation Successfully Completes Term Loan B Repricing

Rhea-AI Summary

Griffon (NYSE: GFF) has successfully repriced its $459 million Secured Term Loan B, which matures in January 2029. The repricing reduces the spread above the Secured Overnight Financing Rate (SOFR) by 25 basis points and removes the Credit Spread Adjustment (CSA), resulting in an estimated annual savings of $1.8 million in cash interest expenses. The applicable SOFR floor has also been reduced from 50 to 0 basis points. This adjustment reflects Griffon’s strong balance sheet and operational results and aims to lower debt costs. Bank of America acted as the administrative agent for this repricing.

Positive

• Repricing of the $459 million Secured Term Loan B reduces the spread above SOFR by 25 basis points.
• Removal of the Credit Spread Adjustment (CSA).
• Reduction of the SOFR floor from 50 to 0 basis points.
• Estimated annual savings of $1.8 million in cash interest expense.

Negative

• None.

Insights

Financial Analyst

Griffon Corporation's successful repricing of its $459 million Secured Term Loan B is a noteworthy financial maneuver. The reduction in the spread above the Secured Overnight Financing Rate (SOFR) by 25 basis points and the removal of the Credit Spread Adjustment (CSA) result in significant interest expense savings. Specifically, Griffon estimates an annual savings of $1.8 million. This repricing reflects positively on Griffon's financial health and efficient capital management.

From a financial standpoint, lowering the loan's interest rate contributes to a stronger balance sheet, improves cash flow and potentially increases profitability. Griffon's operational results and strong balance sheet allowed for this opportunistic repricing, showcasing the company's robust financial strategy and creditworthiness. The move can enhance investor confidence, reflecting prudent financial management and potentially making Griffon a more attractive investment.

Investors should note that reduced interest expenses directly boost net income, which can lead to higher earnings per share (EPS). Over the long-term, this can support stock price appreciation and dividend sustainability. However, they should also monitor how these savings are utilized, whether for reinvestments, debt repayments, or dividends.

Market Research Analyst

Griffon Corporation's repricing of its Term Loan B is a strategic move that signals confidence in the market and in its operational performance. By achieving a lower spread and eliminating the CSA, Griffon is leveraging favorable market conditions, reflecting positively on its market stance. This action reduces the company’s financial burden, freeing up resources that can be redirected towards growth opportunities or enhancing shareholder value through potential buybacks or dividends.

For retail investors, this repricing indicates that Griffon is actively managing its debt to optimize financial performance. The company's ability to negotiate better terms also suggests a solid relationship with financial institutions, which can be advantageous for future financing needs. This move can be seen as a proactive measure to mitigate risks associated with interest rate fluctuations, especially as economic conditions evolve.

Overall, this kind of financial agility and responsive strategy can be a positive indicator for investors looking for stable and growth-oriented companies. It not only showcases Griffon's financial prudence but also its commitment to maintaining a healthy capital structure.

NEW YORK--(BUSINESS WIRE)-- Griffon Corporation (“Griffon” or the “Company”) (NYSE: GFF) announced today that it has completed a favorable repricing of the outstanding balance of $459 million of its Secured Term Loan B facility (“Term Loan B”), which matures in January 2029. The spread above the Secured Overnight Financing Rate (“SOFR”) will be reduced by 25 basis points and the Credit Spread Adjustment (“CSA”) will be removed. The repricing also reduces the applicable SOFR floor from 50 to 0 basis points. All other terms are substantially unchanged. The Company estimates the Term Loan B repricing will result in savings of $1.8 million of annual cash interest expense based on current outstanding balance.

Commenting on the amendment, Ronald J. Kramer, Chairman and Chief Executive Officer, said, “This opportunistic repricing of the Term Loan B reflects Griffon’s strong balance sheet and operational results and reduces the cost of our debt.”

Bank of America, N.A. acted as administrative agent. The pricing of each tier of the secured net leverage grid will be reduced by 25 basis points and the CSA, which ranges between 10 and 25 basis points, will be removed. The current rate is SOFR plus a credit spread of 250 basis points plus the CSA; the rate will now be reduced to SOFR plus a 225 basis point credit spread with no CSA.

About Griffon Corporation

Griffon Corporation is a diversified management and holding company that conducts business through wholly-owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.

Griffon conducts its operations through two reportable segments:

• Home and Building Products ("HBP") conducts its operations through Clopay. Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the Cornell and Cookson brands.
• Consumer and Professional Products (“CPP”) is a leading global provider of branded consumer and professional tools; residential, industrial and commercial fans; home storage and organization products; and products that enhance indoor and outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffon.com.

Forward-looking Statements

“Safe Harbor” Statements under the Private Securities Litigation Reform Act of 1995: All statements related to, among other things, income (loss), earnings, cash flows, revenue, changes in operations, operating improvements, , the industries in which Griffon Corporation (the “Company” or “Griffon”) operates and the United States and global economies that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” "achieves", “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases. Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, among others: current economic conditions and uncertainties in the housing, credit and capital markets; Griffon’s ability to achieve expected savings and improved operational results from cost control, restructuring, integration and disposal initiatives (including, in particular, the expanded CPP global outsourcing strategy announced in May 2023); the ability to identify and successfully consummate, and integrate, value-adding acquisition opportunities; increasing competition and pricing pressures in the markets served by Griffon’s operating companies; the ability of Griffon’s operating companies to expand into new geographic and product markets, and to anticipate and meet customer demands for new products and product enhancements and innovations; increases in the cost or lack of availability of raw materials such as steel, resin and wood, components or purchased finished goods, including any potential impact on costs or availability resulting from tariffs; changes in customer demand or loss of a material customer at one of Griffon’s operating companies; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses; political events or military conflicts that could impact the worldwide economy; a downgrade in Griffon’s credit ratings; changes in international economic conditions including inflation, interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which impacts margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation, regulatory and environmental matters; Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain of Griffon’s operating companies; possible terrorist threats and actions and their impact on the global economy; effects of possible IT system failures, data breaches or cyber-attacks; the impact of COVID-19, or some other future pandemic, on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers and suppliers; Griffon’s ability to service and refinance its debt; and the impact of recent and future legislative and regulatory changes, including, without limitation, changes in tax laws. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company’s Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240626824626/en/

Company Contact

Brian G. Harris

SVP & Chief Financial Officer

Griffon Corporation

(212) 957-5000

IR@griffon.com

Investor Relations Contact

Michael Callahan

Managing Director

ICR Inc.

(203) 682-8311

Source: Griffon Corporation

FAQ

What loan did Griffon reprice?

Griffon repriced its $459 million Secured Term Loan B.

When does Griffon 's repriced Term Loan B mature?

The repriced Term Loan B matures in January 2029.

How much will Griffon save annually from the repricing of Term Loan B?

Griffon estimates annual savings of $1.8 million in cash interest expenses from the repricing.

What changes were made to the spread and SOFR floor in Griffon 's Term Loan B repricing?

The spread above SOFR was reduced by 25 basis points, and the SOFR floor was reduced from 50 to 0 basis points.

Who acted as the administrative agent for Griffon 's loan repricing?

Bank of America acted as the administrative agent for Griffon 's loan repricing.