Summer Infant amends revolver for ‘flexibility’ post-Toys bankruptcy

By Wendy Van Sickle

Columbus, Ohio, Oct. 20 – Summer Infant, Inc. amended its existing revolving credit facility to provide near-term financial flexibility as a result of the bankruptcy filing by Toys “R” Us, Inc. on Sept. 18, according to a press release.

As part of the amendment, Summer Infant’s lenders waived any violations that may have occurred due to “overadvances” made after Toys receivables were no longer deemed eligible accounts for purposes of the borrowing base, reflecting the bankruptcy filing.

The amendment also includes provisions to provide additional flexibility to the company in light of the Toys insolvency proceedings, including permitting post-bankruptcy-filing Toys receivables to qualify as eligible accounts, according to the release.

Toys’ bankruptcy negatively impacted net revenue of Summer Infant by about $2.3 million during the third quarter of 2017, mainly related to delayed shipments to Babies “R” Us, Summer Infant said.

Additionally, Summer Infant expects to record a charge in the third quarter of about $2.1 million as an allowance for bad debt related to pre-bankruptcy petition accounts receivable from Toys.

The estimated impact of the Toys bankruptcy on the Summer Infant’s third quarter results is based on management’s preliminary financial analysis. The unaudited consolidated condensed financial statements for the three and nine months ended Sept. 30 are not yet available and subject to adjustments, the company noted.

"We have analyzed our near term exposure to Babies “R” Us and believe it prudent to reserve an allowance for doubtful accounts given the time it may take for the bankruptcy to run its course,” Mark Messner, chief executive officer, said in the release.

“Going forward, we are taking the appropriate steps to serve this customer, actively manage our inventory, and roll out new products in the fourth quarter. We’re pleased that, once again, we were supported by all institutions participating in our credit agreement with regard to the amendment to provide near-term financial flexibility.”

Woonsocket, R.I.-based Summer Infant designs, markets and distributes juvenile health, safety and wellness products.

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