Daktronics secures financing with JPMorgan Chase
May 22, 2023
JPMorgan Chase has become the new primary commercial bank for Brookings-based Daktronics Inc., part of $100 million in new capital commitments.
JPMorgan closed on a three-year, $75 million senior secured credit facility. In addition, major shareholder Alta Fox Capital Management Inc. agreed to a $25 million convertible debt financing agreement.
In a statement, the Daktronics board said the transaction provides the company with “the working capital and liquidity needed to continue executing its business plan and growth strategy.”
The company made headlines and the value of the its shares fell by more than one-third in December after it filed paperwork with the Securities and Exchange Commission to delay the release of an earnings report “in order to address the determination that there is a substantial doubt about the company’s ability to continue as a going concern.”
The deal with JPMorgan replaces credit with U.S. Bank, which had a $35 million credit facility with Daktronics. Obligations to U.S. Bank have been repaid, and the company did not need to borrow under the new senior debt facility to fund the repayment.
“We are pleased to have delivered on our commitment to identify attractive financing for the company, which was the result of a comprehensive process,” said Howard Atkins, chair of the Daktronics board’s strategy and financing review committee.
“The committee is confident we and our advisors thoroughly explored all alternatives and obtained the best possible outcome in terms of flexibility and overall cost of capital. The new senior debt facility and the junior capital financing provide the company the financial resources to serve our customers and build long-term value for our shareholders.”
Daktronics “continues to make positive progress on several fronts,” chairman and CEO Reece Kurtenbach added.
“In addition to the financial flexibility these new sources of capital provide, the management team continues to implement operational and productivity improvement initiatives intended to increase the company’s profit margins and generate additional cash from operations. We appreciate and are looking forward to developing our new primary banking relationship with JPMorgan Chase, a leading financial services firm with unmatched global capabilities and deep expertise in corporate finance. We also appreciate that Alta Fox has demonstrated its confidence in Daktronics’ path forward by committing additional capital to the company. Alta Fox has been a collaborative partner, and we thank them for their support.”
Daktronics stock has rebounded to trade around $6 per share after a low of $1.46 per share early this year.
“We are pleased to be able to provide capital to Daktronics to help support the company’s promising future,” said Connor Haley, founder and managing partner at Alta Fox.
“We originally invested in Daktronics because we believe the company has a leading position in an industry with significant secular tailwinds and meaningful earnings growth. With the company’s financial position now significantly improved, we look forward to continuing to work constructively with the board and management team to unlock meaningful value for all Daktronics stakeholders.”
