Poly (NYSE:POLY), a global outfitter of professional-grade audio and video technology, today announced that on June 15, 2021 the Company entered into an interest rate hedge transaction designed to reduce the risk of rising interest rates and fix the rate on the majority of the Company’s existing floating-rate term loan at 2.9% effective July 30, 2021.
Poly’s term loan is a floating-rate debt instrument with an interest rate equal to LIBOR plus a 2.5% spread. The interest rate hedge is designed to convert the covered portion of the outstanding term loan from a floating rate to a fixed rate of 2.9% for the next three years. This interest rate hedge complements and will replace a prior hedge at an interest rate of 5.3% for a portion of the remainder of the term loan balance that expires in July 2022.
“By refinancing the 2023 bonds in February at a lower coupon and now removing much of the risk of the floating rate on the term loan, we have significantly reduced the interest rate risk associated with our debt”, said Chuck Boynton, Poly Chief Financial Officer. “With what we believe will be a lower and more predictable interest expense going forward, we believe we have a better opportunity to maximize shareholder value and drive the business forward.”
