Russ Berrie makes credit changes for flexibility
Will help grow infant, juvenile business
Gerri Hunt -- Kids Today, 3/24/2009 8:30:00 AM
OAKLAND, N.J. – Russ Berrie and Co., parent company of Kids Line, LaJobi, Sassy and CoCaLo, has amended its existing credit facility.
The company received unanimous approval from its bank group, which is led by Banc of America Securities LLC and includes a syndicate of seven additional lenders.
“We were pleased to complete this amendment in light of the difficult global macroeconomic environment and tight credit markets,” said Bruce Crain, president and CEO. “This facility now provides us with additional financial flexibility, as we seek to grow our infant and juvenile business, which is differentiated by our design-led, innovative and non-seasonal branded products. We believe this amendment further demonstrates the continued confidence that our lenders have in our more focused and transformed business model following the divestiture of our gift business.”
Prior to the sale of the gift segment in December 2008, the company was restricted in its ability to fund corporate overhead from cash flow generated by the infant and juvenile business. The restrictions have now been eliminated.
Among other things, the amendment provides additional flexibility in the existing financial covenants by increasing the maximum total debt to EBITDA covenant ratios through the third quarter of 2010, and reducing the minimum fixed charge coverage covenant ratio through the third quarter of 2009.
The applicable interest rate margins (which are added to the applicable interest rate), which previously ranged from 2-3% for LIBOR Loans and from .50-1.50% for Base Rate Loans, have been increased to 2-4.25% for LIBOR Loans and to 1-3.25% for Base Rate Loans, in each case based on a pricing grid.
In addition, the total commitments available under the facility were reduced to $130 million (consisting of a $50 million revolving credit facility and an $80 million term loan) from $175 million (consisting of a $75 million revolving credit facility and a $100 million term loan), which better reflects the positive cash flow characteristics of the company's current business.
As of March 20, 2009, after giving effect to the amendment and the payment of related fees, the company’s total debt outstanding under this facility was approximately $104.4 million. This is a result of the company paying down approximately $25 million of debt from April 2, 2008 through March 20, 2009. Separately, the gift segment-related debt was retired with the disposition of the business in December 2008.
The company also became a guarantor of the facility and, subject to specified exceptions, the banks received a lien on substantially all of the parent company’s assets. In connection with the amendment, the company paid aggregate amendment and arrangement fees of 1.25% of the revised commitment.
Paglinco appointed CFO
In other recent news, Russ Berrie has appointed Guy A. Paglinco as interim chief financial officer. He succeeds Anthony Cappiello, who had served as executive vice president, chief administrative officer and interim principal financial officer, who has left the company.
“We would like to thank Tony for the leadership and efforts he brought to Russ Berrie over the past several years during a critical repositioning period,” said Crain. “On behalf of the board of directors and management team, we wish him the best in his future endeavors.”
Paglinco continues to serve as vice president and chief accounting officer, a position he has held since November 2007. He joined the company as vice president - corporate controller in September 2006. Immediately prior to joining the company, Paglinco served in various roles at Emerson Radio Corp., an AMEX-listed international distributor of consumer products, including chief financial officer from 2004 to 2006, and corporate controller from 1998 to 2004. Earlier in his career, Paglinco was an audit manager with KMG Main Hurdman.
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Russ Berrie promotes Guy Paglinco to VP, CFO
Aug 19, 2009
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