Nautilus Refinances with $70 Million Credit Facility

Nautilus refinances
(Photo courtesy Octane Fitness.) In November 2019, Nautilus reported its third consecutive quarter of revenue decline citing low direct segment sales and a strategic reduction in advertising spending. CEO James Barr said he remains optimistic about the company's future, especially after closing its new credit facility.

A Feb. 4 refinancing announcement from Nautilus, Vancouver, Washington, prompted an increase of more than 20 percent in the fitness equipment company's stock price.

The company includes equipment from brands Bowflex, Modern Movement, Nautilus, Octane Fitness, Schwinn and Universal.

Nautilus closed a five-year, $70 million senior secured credit facility comprised of a $55 million asset-based revolver loan and a $15 million term loan with Wells Fargo & Company. The company will use the credit facility to refinance its current $40 million asset-based facility, pay transaction expenses and facilitate corporate business, according to a media release.

Nautilus's stock price (NYSE: NLS) closed at $3.34 on Feb. 5 after previously closing at $2.70 on Feb. 4, prior to the refinancing announcement.

“Our new credit facility provides us with additional financial flexibility to capitalize on the strength of our brand portfolio and positions us for sustainable profitable growth as a global technology-driven fitness company," CEO Jim Barr said in the release. "Investing in our strategic initiatives, digital platform, connected fitness products, go-to-market capabilities and other market opportunities will enable us to deliver new and exciting solutions for our customers wherever they are in their fitness journey.”

The new credit facility does not include any performance covenants through February 2022, after which its liquidity covenant will decrease from $7.5 million to $5 million. The facility's five-year term matures on Jan. 31, 2025.

"We are very pleased to have partnered with Wells Fargo, which is known for its vast experience in the consumer and retail sectors," Nautilus CFO Aina Konold said in the release. "Securing this financing package strengthens our balance sheet and provides increased liquidity and greater financial flexibility. This will allow us to strategically allocate capital to facilitate the execution of our long-term growth strategies as we continue to stabilize our business and return it to profitable growth."

OceanArc Capital Partners LLC was Nautilus' financial advisor for the transaction.

In November 2019, Nautilus reported its third consecutive quarter of revenue decline citing low direct segment sales and a strategic reduction in advertising spending

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