With commitment letters signed for a refinancing that is expected to move quickly and close in about 14 days, Cybex is turning cartwheels since it says it will now be able to re-invest in sales and marketing efforts alongside product development efforts.
"We are very focused on our primary driving force of our business plan -- that is, to differentiate product," Cybex CFO Art Hicks told SNEWS. "Then we're very interested in bolstering our sales and marketing efforts.
"We have some great ideas and we can do a lot more in that area," he added. "There are opportunities to penetrate different markets. There are a variety of segments we don't think have been properly served."
He mentioned expansions or development in the vertical, medical and consumer markets as three examples. CEO and Chairman John Aglialoro had told SNEWS several months ago that a consumer line was in the offing, but not until at least 2004.
CIT Business Credit and Hilco Capital LP on June 12 committed to providing a $30 million, three-year senior financing facility. That would refinance the current debt that was carried by FleetBoston and Wachovia Bank. News of the announcement took the company's stocks by the end of that day up nearly 19 percent, to close at 1.60 on a volume of 42,100, which is more than 10 times its recent average volume of 4,000.
"CIT and Hilco are very supportive. The facility is better suited to the company," said Hicks, who added that FleetBoston and Wachovia didn't really understand the business or the company. "The existing lenders have expressed a preference to be paid out."
In addition to CIT and Hilco, Cybex's principal stockholder, UM Holdings, has agreed to provide up to $8 million in subordinated loans and other guarantees, including advances made to date, as part of the refinancing. That would also provide the company (AMEX: CYB) with additional working capital. Aglialoro, along with his wife, Joan Carter, who is vice chair, run UM Holdings. According to Cybex's most recent annual report, UM Holdings owned just over 50 percent of the company. UM has also already provided Cybex with nearly $4 million in subordinated loans as of early May, according to reports.
"It is great news about the refinancing," Roland Murray, Cybex vice president of sales and marketing, told SNEWS. "We are very excited here in Cybex World about what it means. In the short term, it provides us a lot of relief and, frankly, also anybody affiliated with Cybex."
Murray said a lot of other details aren't available yet on exact steps to be taken since the transaction won't close until late June after all the customary paperwork is done.
"The new debt facility is a vital step for Cybex in the company's continued growth and profitability," Aglialoro said in a statement. "We expect that Q2 will see double-digit revenue growth, exceeding prior guidance of 3 percent to 5 percent."
SNEWS View: We hope this can help turn things around and give one of the industry's historic companies a real foot up. Certainly now the company has the money to keep running and to avoid scenarios, such as a sale or (gulp) bankruptcy, which were also possibilities. We will betcha that Murray and the rest of the company are chomping at the bit to get going and stop spinning their wheels. We can see the pencils being sharpened now -- well, OK, fingers poised over keyboards. We'll eagerly stay tuned for the next chapter.