Regis Corp (NASDAQ: RGS) has entered into a “new senior secured credit facility” with the global asset manager TCW Asset Management Company LLC and Midcap Financial Trust.
Its shares are up well over 100% on Tuesday.
Why does it matter for Regis stock?
A $105 million term loan, the company’s press release added, will replace its existing debt and will help lower its outstanding indebtedness by over $80 million.
Regis Corp will also get to save roughly $7.0 million in annual cash interest as well on the back of today’s announcement. According to Matthew Doctor – its chief executive officer:
This strategic refinancing is a significant milestone for Regis and the next step on our path towards sustainable long-term growth and value creation.
Regis stock is still down some 10% versus its year-to-date high in late January.
RGS secured access to $25 million
The agreement announced this morning will also secure access for Regis Corp to a revolving credit facility worth $25 million.
The aforementioned credit facility as well as the term loan will mature in five years (June 24th, 2029). CEO Doctor also said in the press release on Tuesday:
We’re pleased to have reached a refinancing agreement that will significantly reduce our debt, improve the health of our balance sheet, and increase our financial flexibility so we can focus on transforming our business operations.
The hair salons operator plans on updating investors on its progress during the earnings call for its fourth quarter of 2024. Regis stock does not currently pay a dividend.
Regis took a hit to revenue in fiscal Q3
Chief executive Matthew Doctor dubbed TCW and Midcap investment a “testament to their confidence in the long-term prospects” of Regis Corp on Tuesday.
He also confirmed that the Nasdaq-listed firm remains committed to “improving customer experience, implementing new tech, and managing corporate expenses”.
In May, RGS reported $287 million in system-wide revenue for its third financial quarter – down from $299 million a year ago. Its net loss also increased year-on-year from $1.6 million to $2.3 million in Q3. CEO Doctor said at the time:
The Board continues to review strategic alternatives to assess the Company’s capital structure, and we remain dedicated to maximising value for all of our stakeholders.
Last week, equity analysts at StockNews.com initiated coverage of Regis stock with a “sell” rating. Shares of the hair salons company have a 52-week high of $28 and a 52-week low of $3.87 at writing.
Following today’s surge, shares of Regis Corp are trading well above their 50-day and 200-day moving averages.
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