WESTPORT, Conn. - Compass Diversified Holdings (NYSE: NYSE:CODI), an owner of leading middle market businesses, has enhanced its financial flexibility with an additional $300 million credit facility secured through an amendment to its existing Credit Agreement with Bank of America, N.A. This development, announced on Thursday, comes as the company aims to bolster its acquisition capabilities and general corporate functions. According to InvestingPro data, CODI maintains strong liquidity with a current ratio of 4.22, while demonstrating robust revenue growth of 16.71% over the last twelve months.
The modification, known as the First Incremental Facility Amendment, adds a $200 million term loan and $100 million in delayed draw term loan commitments to the company's financial arsenal. The Incremental Term Loan was obtained on the date of the Amendment, while the Incremental Delayed Draw Term Loan allows for a maximum of two draws before July 9, 2025. InvestingPro analysis shows the company has maintained dividend payments for 20 consecutive years, with analysts setting price targets ranging from $23 to $36 per share.
CODI plans to allocate the proceeds from these loans towards new acquisitions, working capital, capital expenditures, and other corporate purposes. The repayment schedule for the Incremental Term Loan commences on March 31, 2025, with quarterly payments ranging from $3.75 million to $11.25 million, leading up to a final payment due on July 12, 2027.
The Amendment stipulates that, following the full drawdown of the Incremental Delayed Draw Term Loan or the end of the availability period, whichever occurs first, quarterly repayments will begin. These will be based on a percentage of the drawn amount, subject to reductions for certain prepayments.
Compass Diversified's approach since its IPO in 2006 has been to own and manage a diverse portfolio of defensible, middle-market companies across various sectors. The company's strategy involves maintaining controlling ownership interests in its subsidiaries to influence cash flow generation and value creation effectively. With a market capitalization of $1.66 billion and a beta of 1.63, CODI offers investors exposure to middle-market growth while maintaining strong financial health. For deeper insights into CODI's valuation and growth prospects, investors can access comprehensive analysis through InvestingPro's detailed research reports, available for over 1,400 US stocks.
The press release also contains forward-looking statements regarding CODI's performance expectations. These statements are subject to uncertainties, including changes in the economy, financial markets, and the political landscape, among other factors.
This financial move by Compass Diversified Holdings is based on a press release statement and represents the company's efforts to strengthen its position for future growth and acquisitions.
In other recent news, Compass Diversified reported significant developments in its board committee leadership and robust financial performance. The company announced that Director Gordon M. Burns will not stand for re-election at the 2025 annual shareholders meeting, and Nancy B. Mahon has been appointed to succeed Burns as the Chair of the Nominating Committee. Compass Diversified also reported a strong third quarter in 2024, with a 25% increase in adjusted EBITDA to $114 million and an 11.8% year-over-year increase in consolidated net sales to $582.6 million.
Net income also improved to $31.5 million from a net loss of $3.8 million in Q3 2023. However, the industrial segment revenue declined by 4%, primarily due to challenges at Altor Solutions. Despite this, the company increased its full-year adjusted EBITDA guidance to between $510 million and $525 million.
These recent developments reflect Compass Diversified's strong performance and positive outlook for the future. The company's board is also evaluating potential locations for new Lugano stores, including international markets, with preliminary estimates of two new stores next year.
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