Polyphase Corporation (Amex: PLY) today announced it has completed a $44 million refinancing package for its Overhill Farms, Inc. subsidiary.
The new financing for Overhill Farms, Inc. consists of a $16 million revolving line of credit provided by Union Bank of California, N.A. and a $28 million Senior Subordinated 5 year Term Loan provided by the Los Angeles investment firm, Levine Leichtman Capital Partners, II, L.P. By completing the transaction and paying a previous term loan early, Overhill received a prepayment discount of $500,000 on that obligation.
Under the Union Bank line of credit, Overhill has the option to select loan interest rates based on either LIBOR or the prime interest rate. Interest rates will be 2.75% over LIBOR or 1/4% over prime. Overhill’s previous line of credit carried an interest rate of prime plus 1 1/2%. At closing, the company had approximately $5 million available under the new line of credit.
The Levine Leichtman term loan bears interest at 12% and is due in October 2004. As part of the transaction, Overhill was able to reacquire, for $3.7 million, outstanding warrants to purchase 30% of Overhill held by one of its previous lenders. Levine Leichtman received certain fees together with warrants to acquire 17.5% of Overhill exercisable at a nominal amount, as part of the new financing package. The new warrants are fully callable at fair market value upon repayment of the loan.
Levine Leichtman Capital Partners is a private investment firm with in excess of $450 million of institutional capital for investment in middle market companies primarily headquartered in the Western United States. The firm provides debt and equity capital to companies for growth and expansion. Ms. Lauren Leichtman, Chief Executive Officer of the firm, stated relative to the transaction, “We are very pleased to make an investment in Overhill Farms, Inc. We believe the company is a leader in its industry and has a strong and experienced management team.”
In discussing the financing transaction, James Rudis, Polyphase and Overhill Chairman and Chief Executive Officer said, “We are obviously pleased to have completed a long term, lower cost financing package for Overhill and Polyphase. We feel the lower interest rates and lower related loan costs positively reflect the improved strength of the companies. The new lenders, by their actions, have indicated their commitment to help us to continue to grow Overhill; thereby, increasing shareholder value. In addition, the new financing provides us with increased flexibility in managing the company’s assets.”
With respect to the repurchase of the previous warrants, the company indicated that, in the opinion of management, the cost of repurchasing the warrants was significantly below the current market value since a repurchase price for a majority of the warrants was negotiated two years ago as part of the previous term low agreement.
Polyphase is a diversified holding company with nationwide operations primarily in the frozen food and forestry industries.
CONTACT: Polyphase Corporation, 781.871.9121.
Reprinted from PR Newswire with the permission of Overhill Farms, Inc. December 1, 1999