Falcon Prod (NYSE:FCP)
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Falcon Products Completes $135 Million Refinancing
ST. LOUIS, Oct. 6 /PRNewswire-FirstCall/ -- Falcon Products, Inc. (NYSE:FCP),
a leading manufacturer of commercial furniture, today announced that it has
completed a refinancing of the Company's existing credit facility. Detailed
terms of the approximate $135 million package will be filed with the Securities
and Exchange Commission. Proceeds will refinance the Company's existing
revolver and term loans, together with accrued interest, prepayment penalties,
and other fees and expenses of the transaction. Levine Leichtman Capital
Partners, a Los Angeles-based private equity firm, together with DDJ Capital
Management, a Wellesley, MA-based private investment management company, led a
group of banks and other financial institutions in the transaction, which was
facilitated by the Los Angeles-based investment bank, Imperial Capital, LLC.
Arthur E. Levine, founding general partner of Levine Leichtman Capital Partners
remarked, "We are pleased to have closed the investment in Falcon within the
short timeframe requested by the Company. Falcon is now well positioned to
achieve its growth plans and we look forward to partnering with Frank Jacobs
and his team to build long term value."
Franklin A. Jacobs, Chairman and Chief Executive Officer of Falcon Products,
stated, "This transaction is the result of months of careful evaluation and
review of a number of opportunities and we are excited about both the terms of
our arrangement as well as the partnership we now have with Levine Leichtman
Capital Partners. This new financing will provide significant new liquidity
needed to support our current business and help us take advantage of the
rebounding economy." Jacobs continued, "Over the last year, we have made
significant progress towards strengthening and improving the Company's
long-term performance, despite difficult economic conditions. Specifically, we
continue to pursue a consolidation strategy for our manufacturing plants. We
believe this strategy will continue to drive cost savings and industry-leading
reliability in the future. This plant rationalization will leave us with two
domestic plants with approximately 1.5 million of combined manufacturing square
feet and additional worldwide manufacturing capabilities in the Czech Republic,
Denmark, Mexico and China."
Refinancing Highlights
Key elements of the credit facility include:
- a $25 million Revolving Credit Facility, with a three-year term and
interest at LIBOR plus 275 basis points;
- a Term Loan A of $70 million, with a three-year term and interest at
LIBOR plus 900 basis points; and
- a Term Loan B of $45.7 million issued at a discount ($40 million).
Interest on Term Loan B is 15%, including 14% cash prepaid at closing
from the proceeds of the financing, and 1% PIK in the first year, and
7.5% cash and 7.5% PIK in each of years two and three. The Company
will also issue 500,000 shares of the Company's common stock to the
Term Loan B lenders.
Minimum EBITDA covenants are set as follows: no less than $12 million of EBITDA
for the three quarters ending July 30, 2005; and no less than $25 million of
EBITDA for the fiscal year ending October 29, 2005.
Outlook
Falcon also issued guidance with regard to its revenues and EBITDA adjusted for
one time, non-recurring expenses for the fourth quarter of 2004 and for fiscal
2005. For the fourth quarter ending October 30, 2004, the Company believes that
its total sales will be approximately $63.1 million. Adjusted EBITDA for the
quarter is estimated at $5.6 million. For fiscal 2005, the Company believes
that its total sales will be approximately $263 million and adjusted EBITDA
will be approximately $32.4 million. Though it is the Company's policy not to
provide guidance with respect to its projected revenues and earnings,
circumstances relating to the refinancing required that such guidance be issued
at this time.
About Levine Leichtman Capital Partners
Levine Leichtman Capital Partners is a Los Angeles, California private equity
firm that manages in excess of $1 billion in institutional capital. Founded in
1984, the investment firm makes structured equity investments in industry
leading middle market companies owned and managed by entrepreneurs. The firm
enhances shareholder value by providing significant post investment financial
assistance to its portfolio companies. Successful investments by Levine
Leichtman Capital Partners include Media Arts Group Inc., Jon Douglas Real
Estate Services Group, Inc., Consumer Portfolio Services, Inc., the Quizno's
Corporation and CiCi's Pizza, Inc.
About DDJ Capital Management, LLC
DDJ Capital Management, LLC is a boutique investment manager specializing in
private equity and debt financings, as well as high yield and special
situations investing. Founded in 1996, the Wellesley, Massachusetts based
investment firm currently manages more than $2.5 billion on behalf of 65
institutional clients.
About Falcon Products
Falcon Products, Inc. is the leader in the commercial furniture markets it
serves, with well-known brands, the largest manufacturing base and the largest
sales force. Falcon and its subsidiaries design, manufacture and market
products for the hospitality and lodging, food service, office, healthcare and
education segments of the commercial furniture market. Falcon, headquartered
in St. Louis, Missouri, currently operates 8 manufacturing facilities
throughout the world and has approximately 2,100 employees.
Safe harbor statement under the Private Securities Litigation Reform Act of
1995: Statements contained in this news release which are not historical facts
are forward-looking statements, which involve risks and uncertainties which
could impact future financial performance. Factors which could cause future
performance to differ from those anticipated by these forward-looking
statements include, but are not limited to, the ability of the Company to
service its debt obligations and satisfy the covenants in its loan obligations,
the loss of key customers or suppliers within specific industries, the
availability or cost of raw materials, increased competitive pricing pressures
reflecting industry conditions, the general demand for products, general
economic conditions, economic conditions in the markets served by the Company,
and other factors. Additional cautionary statements regarding other risk
factors that could have an effect on future performance of the Company are
described in Falcon's periodic filings with the Securities and Exchange
Commission. Although Falcon believes the expectations reflected in any
forward-looking statements are based on reasonable assumptions, Falcon can give
no assurance that its expectations will be attained. Any forward- looking
statements represent the best judgment of Falcon as of the date of this
release. Falcon disclaims any obligation to update any forward-looking
statements.
FOR FURTHER INFORMATION
AT THE COMPANY:
Franklin A. Jacobs
9387 Dielman Industrial Drive
St. Louis, MO 63132
(314) 991-9200
DATASOURCE: Falcon Products, Inc.
CONTACT: Franklin A. Jacobs of Falcon Products, Inc., +1-314-991-9200