Rockford Corporation closed a $30 million credit facility with co-leads Bank of America and Bank One to provide financing for future acquisitions. Its existing deal with Finova Group expired earlier this month. James Thomson, cfo, explained that the new deal is structured differently than the previous one to accommodate the company's growth strategy. "We were trying to create a financial structure which includes acquisitions," he said. "We have a working line of credit and an acquisitions line." The old deal was an asset-based loan.
The line with Finova was for three years and due to expire. Thomson says the new financing required new leads and the switch was not related to the current state of Finova. "Bank One and Bank of America offer services that Finova couldn't do, such as cash management and treasury management and the ability to flex up," he said. "They're both very strong leads." He declined to comment on pricing other than to say he's "very pleased" with it. Thomson says other banks have approached the company to say they would be interested in joining if the club deal is expanded.
With a $14 million EBITDA and no prior debt, the company was in a good position to secure new financing, said Thomson. Having worked for companies in the past that were in a less comfortable position, Thomson appreciated the relative ease of securing this deal. "I've been on the other side, chasing bankers for money," he said with a laugh. "It's a lot easier to get money when you make money."