EagleRider (ER) is a full-service motorcycle lifestyle and travel experience company that offers enthusiasts the opportunity to rent, tour and own Harley-Davidson, Indian, BMW and other premium iconic motorcycles.
Privately owned, ER generated revenue and EBITDA of $60 Million and $8 Million, respectively.
ER had $36 Million in debt outstanding (or 4.5x Leverage) amongst six different financial institutions. In several of ER’s then existing debt facilities, many of the covenants and requirements were onerous and prevented ER from optimally running its business.
ER then engaged ECS to optimize its debt profile.
|Old Facilities||ECS Re-Engineered Facilities|
|Credit Facilities||6 separate (side by side) debt facilities among different financial institutions - $49 Million in commitments||$40 Million 1st lien credit facility and $15 Million 2nd lien credit facility|
|Debt Outstanding||$36 Million||$36 Million|
|Maturity||1 to 2 years||5 years|
|Personal Guaranties||$36 Million||None|
|All in Cost||6.25%||4.25% - saving over $700,000 per year (1)|
|Financial Covenants||Onerous and antiquated balance sheet based covenants that prevented ER from optimally running its business. Specifically, ER was required to sell motorcycles each year at inopportune times to meet certain balance sheet covenants. In short, not supportive of the company’s operating profile||Effectively covenant lite cash flow based covenants (with significant cushion) with the governing covenant being maximum leverage of 5.5x (Debt/EBITDA) allowing ER to run its business optimally.|
|Collateral Req’s||ER was required to deliver and exchange the physical title for each of its 2,500+ motorcycles to its respective lenders||ER now keeps physical title for its motorcycles which saves them a significant amount of time|
|Amortization Req’s||Significant curtailment at roughly 20% per annum||Virtually no amortization requirements at less than 1% of debt outstanding per annum|
|Structural Innovations||N/A||The 1st lien ABL facility: no cash dominion requirement. The $15 Million second lien facility contains a $5 Million revolving line of credit, allowing ER to temporarily borrow the higher cost 2nd lien debt as needed and then repay it with a lower cost 1st lien facility.|
(1) 4.25% is the weighted average blended rate between the bank loan at L+2% to L+2.5% (depending on leverage) and mezzanine debt at 10%.