Smith & Wesson reduces debt by 54 percent

Shooting Industry, March, 2005

Smith & Wesson Holding Corp. announced in mid-January it has entered into a $40 million credit facility with Banknorth N.A. of Springfield, Mass. The facility includes a seven-year, $12.1 million term loan, a 10-year $5.9 million term loan and a $5 million credit arrangement extending for eight years for capital expenditures.

In addition, the credit facility includes a $17 million revolving line of credit, available until Sept. 30, 2007, for working capital. Smith & Wesson utilized excess cash and the proceeds from the two term loans to repay the $25.1 million outstanding loan due Tomkins Corp. and the $14.2 million remaining on a previous loan from Banknorth.

Upon completion of these transactions. Smith & Wesson Holding will have reduced its total outstanding debt from $39.3 million to $18 million, a 54 percent drop. Due to the combination of the reduced debt and lower interest rates, the holding company expects to reduce its interest expense by approximately $400,000 for the remainder of the fiscal year ending April 30, 2005, and by $1.5 million for the fiscal year ending April 2006, apart from any additional borrowings for capital expenditures.

"We are very pleased with the results of our refinancing efforts. Not only have we dramatically improved our balance sheet and reduced our interest costs, we have also provided the capability to finance the continued growth of our business," said John Kelly, Smith & Wesson chief financial officer.