Dixie Group secures new $75 million credit line

Today, Dixie Group Inc. (market capitalization: $8.17 million), a manufacturer in the carpets and rugs industry, announced the establishment of a new $75 million revolving credit facility with MidCap Financial IV Trust. According to InvestingPro analysis, the company has been operating with significant debt burden, making this refinancing crucial for its operations. This new financial arrangement, effective as of last Monday, replaces the company’s prior credit facility with Fifth Third Bank National Association.

The new credit agreement, which spans over three years until February 25, 2028, will allow Dixie Group to leverage its accounts receivable, inventory, and certain real estate assets to secure the borrowed funds. With a current ratio of 2.54, the company maintains sufficient liquid assets to meet its short-term obligations, though InvestingPro data shows it has been quickly burning through cash. The Calhoun and Chatsworth, Georgia facilities are notably included as collateral under a deed to secure debt lien.

Proceeds from this credit facility were utilized to retire the existing debt with Fifth Third, fulfill contingent letter of credit obligations, and cover various associated costs such as legal fees and other expenses directly related to the financing transaction.

The credit facility comes with standard terms and conditions, including annual administrative fees and charges for unused lines of credit. Pricing will vary based on the availability of excess funds. Additionally, Dixie Group is required to adhere to certain financial covenants, which include maintaining minimum EBITDA thresholds and ensuring a minimum level of excess availability under specified conditions.

Concurrent with the initiation of the new credit agreement, the company’s previous revolving credit arrangement with Fifth Third Bank was terminated in accordance with its terms.

This strategic financial move comes as part of Dixie Group’s efforts to optimize its capital structure and support its ongoing business operations. The information reported is based on a press release statement from the company’s recent SEC filing. With total debt of $113.5 million and last twelve months EBITDA of $5.73 million, investors seeking deeper insights into Dixie Group’s financial health can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks.

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