JAKKS Pacific Announces Successful Completion of Debt Refinancing

Rhea-AI Summary

JAKKS Pacific announced the successful refinancing of its term loan facility, securing a new $99 million term loan from Benefit Street Partners and a $67.5 million revolving credit facility from JP Morgan Chase. The new term loan, maturing in June 2027, replaces a $128.9 million loan with a 10.5% interest rate, projected to reduce interest expenses by over $5 million annually. The refinancing strengthens the company’s liquidity and financial flexibility, enabling investments in growth and margin improvement.

Positive

• Reduced interest expenses by over $5 million annually, improving financial performance.
• Strengthened liquidity through a $67.5 million revolving credit facility maturing in June 2026.
• Proceeds from the refinancing enhance capacity for growth-oriented investments.

Negative

• Accelerated maturity of the $18.9 million Convertible Senior Notes, creating a near-term repayment obligation.

JAKKS Pacific, Inc. (NASDAQ: JAKK) (the “Company”) today announced that on June 2, 2021 it completed the successful refinancing of its existing term loan facility with a new term loan facility from Benefit Street Partners L.L.C. (“BSP”) and entered into a new asset-based revolving credit facility with JP Morgan Chase (“JPM”).

The new first lien term loan facility (“Term Loan”) has a principal balance of $99.0 million maturing in June 2027. The Term Loan will bear interest at a rate of LIBOR plus 6.50% – 7.00% (determined by reference to a net leverage pricing grid), subject to a 1.0% LIBOR floor. Proceeds from the new term loan facility, together with available cash on hand, were used to repay the Company's existing $128.9 million 10.5% term loan facility maturing in 2023, plus unpaid interest and fees and expenses related to the refinancing transactions.

Under the BSP Term Loan, the Company can draw an additional $19.0 million to fund the redemption of any of its 2023 Convertible Senior Notes. The repayment of the Term Loan accelerates the maturity of the Convertible Senior Notes to September 1, 2021, 91 days from the repayment of the Term Loan. As of June 3, 2021, the outstanding Convertible Senior Notes’ balance was $18.9 million.

The Company also successfully obtained commitments from JPM for a $67.5 million asset-based revolving credit facility maturing in June 2026. The new revolving credit facility replaced the Company's existing $60.0 million revolving credit facility maturing in August 2022. Any amounts borrowed under the revolving credit facility will bear interest at a rate of LIBOR plus 1.50% – 2.00% (determined by reference to an excess availability pricing grid).

JAKKS Pacific’s Chairman and CEO Stephen Berman stated, “We have taken proactive measures to refinance and extend our debt, which enhances our ability to invest in growth, reduces our projected interest expense by over $5 million annually and increases our overall financial flexibility with respect to covenants and liquidity. Today’s refinancing further positions JAKKS Pacific to continue its strong momentum as we execute on our strategy to increase margins, grow EBITDA, and ultimately drive value to shareholders.”

BSP was also an investor and a participant in the prior Term Loan facility as part of the Company’s 2019 Recapitalization. BSP is a leading credit-focused alternative asset management firm with over $30 billion in assets under management as of March 31, 2021. BSP manages assets across a broad range of complementary credit strategies, including private/opportunistic debt, structured credit, high yield, special situations, and commercial real estate. Based in New York, the BSP platform was established in 2008. BSP is a wholly owned subsidiary of Franklin Templeton (NYSE: BEN).

Houlihan Lokey served as exclusive placement agent and Buchalter PC as legal advisor to the Company in executing these transactions.

About JAKKS Pacific, Inc.

JAKKS Pacific, Inc. is a leading designer, manufacturer and marketer of toys and consumer products sold throughout the world, with its headquarters in Santa Monica, California. JAKKS Pacific’s popular proprietary brands include: Creepy Crawlers®, Eyeclops®, Fly Wheel®, Kitten Catfe™, Perfectly Cute®, ReDo Skateboard Co.®, WeeeDo™, Xtreme Power®, Disguise®, Maui®, Moose Mountain®, Kids Only!®; and a wide range of entertainment-inspired products featuring premier licensed properties. Through JAKKS Cares, the company’s commitment to philanthropy, JAKKS Pacific is helping to make a positive impact on the lives of children. Visit us at www.jakks.com and follow us on Instagram (@jakkstoys), Twitter (@jakkstoys) and Facebook (JAKKS Pacific).

Forward-Looking Statements

This press release may contain “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates and projections about JAKKS Pacific's business based partly on assumptions made by its management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such statements due to numerous factors, including, but not limited to, those described above and in the Company’s public filings, changes in demand for JAKKS Pacific's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, or that the refinancing transaction or any future transactions will result in future growth or success of JAKKS Pacific. The “forward-looking statements” contained herein speak only as of the date on which they are made, and JAKKS Pacific undertakes no obligation to update any of them to reflect events or circumstances after the date of this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210603005368/en/

FAQ

What is the new term loan amount for JAKKS Pacific announced in June 2021?

JAKKS Pacific announced a new term loan facility of $99 million.

What is the maturity date for the new term loan facility for JAKKS Pacific?

The new term loan facility matures in June 2027.

How much will JAKKS Pacific save annually on interest expenses due to the refinancing?

JAKKS Pacific projects to save over $5 million annually on interest expenses.

What is the purpose of the additional $19 million draw under the new term loan for JAKKS Pacific?

The additional $19 million can be used to fund the redemption of the 2023 Convertible Senior Notes.

When do the Convertible Senior Notes for JAKKS Pacific mature after the refinancing?

The Convertible Senior Notes will now mature on September 1, 2021.