JAKKS Pacific Reaches Agreement with Lenders for Covenant Relief Until March 2022 and Partial Pre-Payment of Term Loan

Rhea-AI Summary

JAKKS Pacific has secured a waiver on its EBITDA covenant until March 31, 2022, reducing the requirement from $34 million to $25 million. The agreement with lenders allows JAKKS to pre-pay $15 million of its term loan immediately, with the option to pre-pay an additional $5 million by Q3 2021. As of September 30, 2021, the company had $138.8 million in outstanding debt. CEO Stephen Berman highlighted that this agreement will decrease interest expenses and enhance financial flexibility without diluting shareholder value, aiming for operational improvements and future growth.

Positive

• Reduced EBITDA covenant from $34 million to $25 million, increasing financial flexibility.
• Immediate pre-payment of $15 million on the term loan decreases overall indebtedness.
• No dilution to shareholders from the agreement.

Negative

• None.

SANTA MONICA, Calif.--(BUSINESS WIRE)--JAKKS Pacific, Inc. (NASDAQ: JAKK, “Company”) has reached an agreement with holders of its term loan (“the Term Loan Group”) and Wells Fargo, holder of its revolving credit facility to receive a waiver on its EBITDA covenant until March 31, 2022. The term loan previously had a covenant requiring trailing 12-month EBITDA (as defined and adjusted) to be at least $34 million. Under the agreement reached with lenders, the trailing 12-month EBITDA requirement has been reduced to $25 million, which will not be calculated earlier than March 31, 2022.

Under the agreement, JAKKS Pacific will pre-pay $15.0 million of the term loan immediately and, under certain conditions, pre-pay up to an additional $5.0 million no later than the third quarter of 2021. As of September 30^th, the Company had $138.8 million outstanding on its term loan.

Stephen Berman, JAKKS’ co-founder and CEO said, “The agreement we have reached with our lenders allows us to reduce our indebtedness and related interest expense without additional dilution to our shareholders, while also providing greater financial flexibility as we continue to work on improving our operations and positioning the company for future growth. We appreciate the continued demonstration of support.”

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; Fly Wheels™, Kitten Catfe™, Perfectly Cute™, ReDo™ Skateboard Co, X-Power™, Disguise®, Moose Mountain®, Maui®, Kids Only!®; a wide range of entertainment-inspired products featuring premier licensed properties; and C’est Moi™, a new generation of clean beauty. Through JAKKS Cares, the company’s commitment to philanthropy, JAKKS 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).