06 Feb Phoenix Footwear Reports New Bank Financing
Phoenix Footwear Group, Inc., the parent of Trotters and SoftWalk, entered into a new bank financing agreement with NewStar Business Credit, LLC.
On Feb. 2, 2015, the company entered into a loan and security agreement with NewStar Business Credit, LLC. The loan agreement provides for up to $9.0 million in borrowing capacity consisting up to $8.0 million with a five-year maturity and a term loan of $1,000,000. The principal amount of the term loan is payable in 36 equal monthly installments of $27,778, plus accrued interest, on the first day of each calendar month beginning Mar. 1, 2015.
Interest accrues on the principal amount outstanding under the revolving credit facility at the rate equal to the greater of (i) the rate per annum published on each business day in the “Money Rates” table of The Wall Street Journal as the one-month LIBOR rate, adjusted daily, and (ii) 1.0 percent (such greater amount, the “LIBOR Rate”) plus 3.75 percent. Interest accrues on the principal amount outstanding under the term loan at the rate equal to the LIBOR Rate plus 5.0 percent.
This new revolving and term facility offers the company additional working capital at a substantially reduced cost.
Commenting on the new loan agreements, James Riedman, President and CEO of Phoenix Footwear added, “We have grown for three consecutive years, the last two of which have been at four times the industry average. We are especially pleased to be able to secure this additional capacity to fund our continued growth, while at the same time, reduce our capital costs.”
The loan agreement includes various financial and other covenants with which the company has to comply in order to maintain borrowing availability and avoid penalties, including maintaining minimum tangible net worth and minimum fixed charge coverage ratios.
At the closing under the loan agreement, the company used proceeds from the Term Loan and the revolving credit facility to pay in full the obligations outstanding under that Loan and Security Agreement dated July 30, 2012 between the company and Alostar Bank of Commerce, which carried an annual interest rate of 6.5 percent plus a monthly fee of $2,000, and that Loan and Security Agreement dated July 30, 2012 between the company and Gibraltar Business Capital which carried an annual interest rate of 18 percent. Those agreements were terminated.
As condition to the closing under the loan agreement, the company also extended from October 30, 2015 until July 31, 2020 the maturity date of the $1,350,000 in aggregate principal amount of its subordinated secured 1 percent convertible notes held by Greenwood Capital Limited Partnership and MGPLA LP.