Cybex replies: Refi still "viable"
Although Cybex International mentioned in its first quarter financial report earlier this month that a sale of the company was an alternative to retire its bank debt, CFO Art Hicks told SNEWS that a refinance is still "viable" and could happen "sooner rather than later."
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Although Cybex International mentioned in its first quarter financial report earlier this month that a sale of the company was an alternative to retire its bank debt, CFO Art Hicks told SNEWS that a refinance is still “viable” and could happen “sooner rather than later.”
The reason the company mentioned in the release that its investment banker, Legg Mason, was including a sale as one of several options for satisfying Cybex’s cash dilemma was to stem the tide of rumors, he said.
“We wanted to be blunt about it,” Hicks said, “one, because of all the rumors and, two, to be candid. We thought it better to be candid.”
He said the banks want to be paid off by the end of the year, but as long as bank representatives think progress is being made by the Medway, Mass.-based, company (AMEX: CYB), they will extend the forbearance period, which now runs through June 30, but is subject to an Aug. 30 extension.
“We have to cover all bases,” he said, and that includes talking to interested purchasers of the company “just in case” — whether the outcome is a sale or not.
“We had to put it in that we are approaching potential buyers,” he said. “In the end, we have to pay off the bank.”
In the first quarter results reported May 13 and reported in a SNEWS story May 19, gross margins were down significantly, showing 32.5 percent compared to 38.3 percent a year ago. This resulted in a net loss for the quarter of $1.78 million compared to a net income a year ago of $59,000, with an operating loss of $827,000 this just-concluded quarter compared to $711,000 in operating income a year earlier.
“With a refinancing,” Hicks said, “we’re very optimistic we can improve margins on a number of fronts.”
The company has said it is working on its credit facility since early this year and expects a refinancing to come through in the second quarter, which ends June 30.