SPRINGFIELD, Mass., Aug. 19, 2013 /PRNewswire/ -- Smith & Wesson Holding Corporation (NASDAQ Global Select Market: SWHC), a leader in firearm manufacturing and design, today announced that it has successfully completed a new $75 million unsecured revolving credit facility (the "Credit Facility") that is expandable under an accordion feature that allows, in certain circumstances, for the company to increase the size of the Credit Facility in $25 million increments up to a maximum loan of $175 million. The new Credit Facility replaces the company's existing secured $55 million credit facility that was set to expire in December 2014. Proceeds will be used for general corporate purposes.
Jeffrey D. Buchanan, Smith & Wesson Executive Vice President and Chief Financial Officer, said, "The fact that the new Credit Facility is expandable and unsecured reflects a vote of confidence in the direction and strategies of our company by TD Bank and the other banking participants. This is the first time in the company's history that we have achieved credit agreement terms comparable to what investment grade companies receive in the current market. This represents another step in our commitment to developing flexibility within our capital structure."
Compared with the prior credit facility, the new Credit Facility provides increased borrowing capacity and more favorable terms and conditions, including a maturity date approximately two years beyond the expiration of the prior credit facility, improved financial covenants, and a reduction of approximately 75 basis points on average across the pricing grid. Loans under the Credit Facility will bear interest, at the company's option, at a rate equal to the LIBOR rate, plus an applicable margin, or the prime lending rate, plus an applicable margin, subject to adjustment based upon the company's consolidated leverage ratio. Based on current rates, should the company borrow against the credit facility, the interest rate would be approximately 1.70% for LIBOR rate loans and 3.75% for prime rate loans.