Gorman-Rupp Completes Debt Refinancing
03 Juni 2024 - 1:30PM
Business Wire
The Gorman-Rupp Company (NYSE: GRC) (the “Company”), a leading
designer, manufacturer, and international marketer of pumps and
pump systems, announced the completion of a series of transactions
to refinance its debt. These transactions are expected to reduce
interest expense, and will extend and stagger the Company’s debt
maturities.
Summary:
- Upsized, amended and extended the existing Senior Term Loan
Facility to $370.0 million;
- Amended and extended the existing $100.0 million revolving
Credit Facility;
- Issued $30.0 million of new 6.40% Senior Secured Notes due
2031; and
- Retired the existing $90.0 million unsecured Subordinated
Credit Facility.
Loans under the upsized, amended and extended Amended and
Restated Senior Secured Credit Agreement will initially accrue
interest at an annual rate of Adjusted Term SOFR plus 2.25%,
subject to an improved leverage based pricing grid. Amortization is
payable quarterly on the term loans with the balance due on a new
maturity date of May 31, 2029, which was extended from May 31,
2027. The maturity date for the existing $100.0 million revolving
Credit Facility, which remained at a zero balance following the
refinancing, was similarly extended to May 31, 2029. The Company
privately placed $30.0 million aggregate principal amount of new
Senior Secured Notes which accrue interest at a fixed annual rate
of 6.40%, with interest paid semi-annually and the principal due in
full on May 31, 2031. The proceeds from the upsized Amended and
Restated Senior Secured Credit Agreement and the issuance of the
new Senior Secured Notes, as well as $10.0 million of cash on hand,
were used to retire the Company’s $90.0 million unsecured
Subordinated Credit Facility. The retired Subordinated Credit
Facility had been accruing interest at an annual rate of Adjusted
Term SOFR plus 9.10% and was scheduled to mature on December 1,
2027.
The combined transactions are expected to reduce annual interest
expense by approximately $7.0 million, subject to changes in the
underlying interest rates. In the second quarter of 2024, the
Company will record a $1.8 million prepayment fee related to the
early retirement of the unsecured Subordinated Credit Facility and
will expense approximately $1.3 million of transaction related
fees. In addition, the Company will record a non-cash charge of
approximately $4.4 million to write-off unamortized previously
deferred transaction fees related to both the unsecured
Subordinated Credit Facility and a portion of the existing Senior
Term Loan Facility.
Jim Kerr, Executive Vice President and Chief Financial Officer
commented, “Since the acquisition of Fill-Rite in May 2022 we have
been focused on reducing the debt incurred to finance the
acquisition and improving our leverage. Our financial results and
working capital management have improved our leverage and allowed
us to retire the higher interest unsecured subordinated debt,
replacing it with lower interest secured debt with a later maturity
date. We believe the new structure provides flexibility and
continues to position us to execute on our strategic initiatives
and create value for our shareholders.”
The Company will provide more details about the terms and
conditions in a Form 8-K filing with the Securities and Exchange
Commission (SEC).
About The Gorman-Rupp Company
Founded in 1933, The Gorman-Rupp Company is a leading designer,
manufacturer and international marketer of pumps and pump systems
for use in diverse water, wastewater, construction, dewatering,
industrial, petroleum, original equipment, agriculture, fire
suppression, heating, ventilating and air conditioning (HVAC),
military and other liquid-handling applications.
Forward-Looking Statements
In connection with the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, The Gorman-Rupp Company
provides the following cautionary statement: This news release
contains various forward-looking statements based on assumptions
concerning The Gorman-Rupp Company’s operations, future results and
prospects. These forward-looking statements are based on current
expectations about important economic, political, and technological
factors, among others, and are subject to risks and uncertainties,
which could cause the actual results or events to differ materially
from those set forth in or implied by the forward-looking
statements and related assumptions. Such uncertainties include, but
are not limited to, our estimates of future interest rate expense,
earnings and cash flows, general economic conditions and supply
chain conditions and any related impact on costs and availability
of materials, integration of the Fill-Rite business in a timely and
cost effective manner, retention of supplier and customer
relationships and key employees, the ability to achieve synergies
and cost savings in the amounts and within the time frames
currently anticipated and the ability to service and repay
indebtedness incurred in connection with the transaction. Other
factors include, but are not limited to: company specific risk
factors including (1) loss of key personnel; (2) intellectual
property security; (3) acquisition performance and integration; (4)
the Company’s indebtedness and how it may impact the Company’s
financial condition and the way it operates its business; (5)
general risks associated with acquisitions; (6) the anticipated
benefits from the Fill-Rite transaction may not be realized; (7)
impairment in the value of intangible assets, including goodwill;
(8) defined benefit pension plan settlement expense; (9) risk of
reserve and expense increases resulting from the LIFO inventory
method; and (10) family ownership of common equity; and general
risk factors including (11) continuation of the current and
projected future business environment; (12) highly competitive
markets; (13) availability and costs of raw materials and labor;
(14) cybersecurity threats; (15) compliance with, and costs related
to, a variety of import and export laws and regulations; (16)
environmental compliance costs and liabilities; (17) exposure to
fluctuations in foreign currency exchange rates; (18) conditions in
foreign countries in which The Gorman-Rupp Company conducts
business; (19) changes in our tax rates and exposure to additional
income tax liabilities; and (20) risks described from time to time
in our reports filed with the Securities and Exchange Commission.
Except to the extent required by law, we do not undertake and
specifically decline any obligation to review or update any
forward-looking statements or to publicly announce the results of
any revisions to any of such statements to reflect future events or
developments or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20240603610275/en/
Brigette A. Burnell Corporate Secretary The Gorman-Rupp Company
Telephone (419) 755-1246 For additional information, contact James
C. Kerr, Chief Financial Officer, Telephone (419) 755-1548.
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