SAN DIEGO, Dec. 19, 2018 /PRNewswire/
-- Turtle Beach Corporation (Nasdaq: HEAR), the
leading gaming headset and audio accessory brand, has amended
its revolving credit agreement with Bank of America (the "BofA
Revolver"), and has paid off the remaining balances on both its
term loan and subordinated debt, materially delevering the
company.
Summary of Changes
- Remaining $12.5 million term loan
balance has been repaid;
- Remaining $10.7 million
subordinated debt balance has been repaid;
- Long-term obligations, excluding our revolver, have been
reduced from $52.6 million at the
beginning of the year to zero;
- BofA Revolver has been extended to March
5, 2024;
- Increased advance rates on inventory and accounts receivable
will drive greater availability on the revolver;
- Covenants on the revolver have been simplified, and now only
require a fixed charge ratio of 1:0x or greater (measured
quarterly); and
- Funds from the revolver can be used to repurchase up to
$10.0 million of common stock over
the term of the agreement without prior lender approval.
"Our sales, profits and cash flow generation have continued to
exceed our expectations," said Juergen
Stark, CEO, Turtle Beach Corporation. "Continued outstanding
sales and profit momentum, as underscored by our 51% revenue share
of the U.S. console headset market in November as per
NPD1, has allowed us once again to negotiate better debt
terms and to further strengthen our balance sheet. We have
eliminated all debt except for the revolver, reduced our annual
interest costs by well over $1
million, and secured a revolving facility that gives us
greater flexibility to grow our business and drive shareholder
value."
The amended BofA Revolver now has a remaining term of longer
than five years, and provides up to $80
million in borrowings. The only covenant on the BofA
Revolver is the maintenance of a quarterly fixed charge coverage
ratio of 1:0x or higher upon a triggering event.
In addition, the BofA Revolver has higher advance rates on both
inventory and accounts receivable, which has the effect of
increasing the funds availability, allowing the company to rely
solely on the BofA Revolver to support its business. Finally,
the new terms allow the company to use the revolver to repurchase
up to $10.0 million of its common
stock over the term of the BofA Revolver without first securing
approval from the lenders, and to repurchase higher amounts with
approval, should the company decide to do so in the
future.
Upon closing the BofA Revolver, the company repaid in full the
remaining $12.5 million on its term
loan, and the remaining $10.7 million
on its subordinated debt. As a result of these repayments, the
company's only outstanding debt is its asset-backed revolver. "We
were delighted to work with Bank of America on these latest moves
to strengthen our balance sheet," said John
Hanson, Turtle Beach's CFO. "Excluding our revolver, our
combined long-term obligations at the beginning of 2018 were over
$52 million, including term loans,
subordinated debt and the Series B preferred stock. We have been
able to completely eliminate these obligations through internally
generated cash flow, additional borrowings under the BofA Revolver,
and the issuance of less than $9.0
million in common stock earlier this year."
Terms of the new agreements will be detailed in a Form 8-K to be
filed by the Company today with the Securities and Exchange
Commission.
1Source: The NPD Group/Retail Tracking
Service/Video Games/Dollars/U.S/November
2018
About Turtle Beach Corporation
Turtle Beach (www.turtlebeach.com) is a leading gaming accessory
brand, offering a wide selection of cutting-edge, award-winning
gaming headsets. Whether you're a professional esports athlete,
hardcore gamer, casual player, or just starting out, Turtle Beach
has the gaming headset to help you truly master your skills.
Innovative and advanced technology, amazing high-quality gaming
audio, crystal-clear communication, lightweight and comfortable
designs, and ease-of-use are just a few features that make Turtle
Beach a fan-favorite brand for gamers the world over. Designed for
Xbox, PlayStation®, and Nintendo consoles as well as for
PC, Mac®, and mobile/tablet devices, owning a Turtle
Beach gaming headset gives you the competitive advantage. Hear
Everything. Defeat Everyone.™ The company's shares are traded on
the Nasdaq Exchange under the symbol: HEAR.
Cautionary Note on Forward-Looking Statements
This press release includes forward-looking information and
statements within the meaning of the federal securities laws.
Except for historical information contained in this release,
statements in this release may constitute forward-looking
statements regarding assumptions, projections, expectations,
targets, intentions or beliefs about future events. Statements
containing the words "may", "could", "would", "should", "believe",
"expect", "anticipate", "plan", "estimate", "target", "project",
"intend" and similar expressions constitute forward-looking
statements. Forward-looking statements involve known and unknown
risks and uncertainties, which could cause actual results to differ
materially from those contained in any forward-looking statement.
Forward-looking statements are based on management's current
belief, as well as assumptions made by, and information currently
available to, management.
While the Company believes that its expectations are based upon
reasonable assumptions, there can be no assurances that its goals
and strategy will be realized. Numerous factors, including risks
and uncertainties, may affect actual results and may cause results
to differ materially from those expressed in forward-looking
statements made by the Company or on its behalf. Some of these
factors include, but are not limited to, risks related to the
Company's liquidity, the substantial uncertainties inherent in the
acceptance of existing and future products, the difficulty of
commercializing and protecting new technology, the impact of
competitive products and pricing, general business and economic
conditions, risks associated with the expansion of our business
including the implementation of any businesses we acquire, our
indebtedness, and other factors discussed in our public filings,
including the risk factors included in the Company's
most recent Annual Report on Form 10-K, Quarterly Report
on Form 10-Q and the Company's other periodic reports.
Except as required by applicable law, including the securities laws
of the United States and the rules
and regulations of the Securities and Exchange Commission, the
Company is under no obligation to update or revise any
forward-looking statement after the date of this release whether as
a result of new information, future developments or otherwise.
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SOURCE Turtle Beach Corporation