Turning Point Brands amends and restates $250 million credit facility

By Sarah Lizee

Olympia, Wash., March 8 – Turning Point Brands, Inc. amended and restated its $250 million secured credit facility on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The facility is comprised of a first-lien credit agreement with Fifth Third Bank as administrative agent and a second-lien credit agreement with Prospect Capital Corp. as administrative agent.

The first-lien credit agreement consists of a $50 million revolving credit facility, of which $4.1 million was drawn at closing, and a $160 million first-lien term loan, each due March 7, 2023. There is an up to $40 million accordion feature.

Borrowings under the first-lien term loan and revolver bear interest at Libor plus a spread of 275 basis points to 350 bps, based on the company’s senior leverage ratio.

The first-lien credit agreement contains financial covenants, including a maximum senior leverage ratio of 3.5 times with step-downs to 3 times, a maximum total leverage ratio of 4.5 times with step-downs to 4 times, and a minimum fixed-charge coverage ratio of 1.2 times.

Borrowings under the revolving credit facility may be used for general corporate purposes, including acquisitions.

The second-lien credit agreement consists of a $40 million second-lien term loan that matures March 7, 2024 and bears interest at Libor plus a spread of 700 bps.

The second-lien credit agreement also contains financial covenants, including a maximum senior leverage ratio of 3.75 times with step-downs to 3.5 times, a maximum total leverage ratio of 4.75 times with step-downs to 4.5 times, and a minimum fixed-charge coverage ratio of 1.1 times.

Proceeds from the secured credit facility were used to repay in full the company’s prior credit facilities and to pay related fees and expenses.

Turning Point is a Louisville, Ky., provider of tobacco products, including chewing tobacco, moist snuff, cigarette papers and cigar products, and e-cigarettes and liquids.

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