Company enters into six-year term loan
agreement with lower interest rate and greater flexibility to
execute long-term strategic plan
Horizon Global Corporation (NYSE: HZN), one of the leading
manufacturers of branded towing and trailering equipment, today
announced the closing of an attractive new financing agreement with
Atlantic Park Strategic Capital Fund, L.P. (“Atlantic Park”). The
six-year agreement addresses all of the Company’s near-term
maturities, provides long-term stability to its capital structure
and offers the financial flexibility necessary to pursue its
strategic initiatives. Proceeds received by the Company will be
used to:
- Repay in full all outstanding debt under the Company’s existing
term loan, which would have otherwise matured on April 1, 2022. As
a result of the repayment of all amounts outstanding under the
existing term loan, it will be terminated and will no longer be in
effect.
- Create a $125.0 million delayed draw term loan with enough
capacity to repay all of the Company’s outstanding convertible
senior notes at maturity on July 1, 2022. The delayed draw term
loan has a nominal ticking fee and the Company is not required to
draw any amounts prior to June 30, 2022. When the delayed draw term
loan is used to fully repay the converts, the Company will not have
any substantial maturities prior to February 2027, other than its
asset-based revolving credit facility.
Key benefits to the Company of the new agreement also
include:
- Significant reduction in interest rates, with new rate of LIBOR
+ 750 (1% LIBOR floor).
- Flexible financial covenants. Net leverage ratio covenant,
which will be initially tested on March 31, 2023, set with
significant headroom to the Company’s forecasted earnings growth
and deleveraging.
- Call protection schedule provides significant strategic
optionality to the Company. Following a one-year no-call period,
the agreement provides for a call premium of 102.5 for each of
years two through five and par thereafter.
“This financing is a testament to the tremendous effort of all
Horizon Global employees. We’ve gained substantial momentum since
late 2019, and we continue to work as one global team to optimize
the business on a daily basis. In addition to our significant
operating improvements over the past 16 months, we have now fully
addressed our capital structure issues,” stated Terry Gohl, Horizon
Global’s President and Chief Executive Officer. “This momentum
continues as we welcome Atlantic Park as a lending partner.
Atlantic Park, with its deep credit expertise and growth equity
focus, is a terrific partner for us as we enter the next stage of
our continued growth and transformation on behalf of our
shareholders. We want to thank Atlantic Park for its support of
both our management team and the Company’s long-term strategic
goals.”
Gohl continued, “In executing against our strategic plan, we’ve
challenged ourselves to be opportunistic at every level. This
financing is consistent with this mindset. With a six-year tenor,
materially lower interest rate and a flexible covenant structure,
this financing optimizes our capital structure and provides the
financial flexibility we need to support the long-term growth of
this business.”
Matthew Bonanno, Managing Director at General Atlantic and
member of the Atlantic Park Investment Committee, said, “Atlantic
Park is pleased to partner with Horizon Global and to provide an
optimized, long-term capital structure to support the business. As
a consumer-branded products business, we plan to leverage our
expertise in the space to contribute to the company’s continued
momentum. We look forward to working alongside Terry and the
Horizon Global management team to capture additional growth
opportunities across the e-commerce sales channels in order to
further aid the company’s transformation.”
The new term loan will bear interest at LIBOR + 750 basis
points, with a 1% LIBOR floor, and will mature on February 2, 2027.
In connection with the new term loan, the Company issued to
Atlantic Park warrants to purchase up to 10.0% of the Company’s pro
forma fully diluted shares of common stock at an exercise price of
$9.00 per share. The warrants have a five-year term, provide
alignment between Atlantic Park and the Company’s shareholders as
well as reflect Atlantic Park’s confidence in the growth and
long-term value of the Company. Matthew Bonanno will join the
Horizon Global board of directors as an observer.
Jefferies served as the exclusive financial advisor to Horizon
Global on the transaction.
About Horizon Global
Headquartered in Plymouth, MI, Horizon Global is the #1
designer, manufacturer and distributor of a wide variety of
high-quality, custom-engineered towing, trailering, cargo
management and other related accessory products in North America
and Europe. The Company serves OEMs, retailers, dealer networks and
the end consumer as the category leader in the automotive, leisure
and agricultural market segments. Horizon provides its customers
with outstanding products and services that reflect the Company’s
commitment to market leadership, innovation and operational
excellence. The Company’s mission is to utilize forward-thinking
technology to develop and deliver premium products for our
customers, engage with our employees and realize value creation for
our shareholders.
Horizon Global is home to some of the world’s most recognized
brands in the towing and trailering industry, including: Draw-Tite,
Reese, Westfalia, BULLDOG, Fulton and Tekonsha. Horizon Global has
approximately 3,900 employees.
For more information, please visit www.horizonglobal.com.
About Atlantic Park
Atlantic Park is a strategic joint venture between General
Atlantic, a global growth equity firm established 40 years ago, and
Iron Park Capital Partners, a deeply experienced credit-focused
asset manager. Atlantic Park provides capital solutions to address
financing needs for high-quality companies seeking a trusted
partner. Atlantic Park takes a broad industry focus and partners
with companies spanning a number of sectors, including Consumer,
Financial Services, Healthcare and Technology, with a focus on
companies in the United States and Europe. For more information,
please visit www.atlanticpark.com.
Forward-Looking
Statements
This release contains “forward-looking statements” as defined in
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements contained herein speak only as of the
date they are made and give our current expectations or forecasts
of future events. These forward-looking statements can be
identified by the use of forward-looking words, such as “may,”
“could,” “should,” “estimate,” “project,” “forecast,” “intend,”
“expect,” “anticipate,” “believe,” “target,” “plan” or other
comparable words, or by discussions of strategy that may involve
risks and uncertainties. These forward-looking statements are
subject to numerous assumptions, risks and uncertainties which
could materially affect our business, financial condition or future
results including, but not limited to, risks and uncertainties with
respect to: the impact of the novel coronavirus (COVID-19) pandemic
on the Company’s business, results of operations, financial
condition and liquidity; the Company’s ability to maintain
compliance with the New York Stock Exchange’s continued listing
standards; the Company’s debt, including the Company’s ability to
comply with the applicable financial covenants related thereto;
liabilities and restrictions imposed by the Company’s debt
instruments; market demand; competitive factors; supply
constraints; material and energy costs; technology factors;
litigation; government and regulatory actions including the impact
of any tariffs, quotas, or surcharges; the Company’s accounting
policies; future trends; general economic and currency conditions;
various conditions specific to the Company’s business and industry;
the success of the Company’s action plan, including the actual
amount of savings and timing thereof; the success of the Company’s
business improvement initiatives in Europe-Africa, including the
amount of savings and timing thereof; the Company’s exposure to
product liability claims from customers and end users, and the
costs associated therewith; the Company’s ability to meet its
covenants in the agreements governing its debt; factors affecting
the Company's business that are outside of its control, including
natural disasters, pandemics, including the current COVID-19
pandemic, accidents and governmental actions; and other risks that
are discussed in the Company’s most recent Annual Report on Form
10-K, Quarterly Reports on Form 10-Q or Current Reports on Form
8-K. The risks described herein are not the only risks facing our
Company. Additional risks and uncertainties not currently known to
us or that we currently deemed to be immaterial also may materially
adversely affect our business, financial position and results of
operations or cash flows. We caution readers not to place undue
reliance on such statements, which speak only as of the date
hereof. We do not undertake any obligation to review or confirm
analysts’ expectations or estimates or to release publicly any
revisions to any forward-looking statement to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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version on businesswire.com: https://www.businesswire.com/news/home/20210203005311/en/
Jeff Tryka, CFA Investor Relations, Lambert & Co. (616)
295-2509 jtryka@horizonglobal.com
Horizon Global (NYSE:HZN)
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