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[8-K] Jakks Pacific Inc Reports Material Event

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K
Rhea-AI Filing Summary

JAKKS Pacific (NASDAQ:JAKK) has secured a new $70 million first-lien secured revolving credit facility with BMO Bank N.A., replacing its existing $67.5 million facility with JPMorgan Chase. The new cash flow-based credit facility, maturing in June 2030, offers more favorable terms with interest rates at SOFR plus 1.50-2.00% or base rate plus 0.50-1.00%. The agreement includes standard covenants requiring an Interest Coverage Ratio of at least 3.00:1.00 and a Total Net Leverage Ratio not exceeding 2.00:1.00. The facility is secured by substantial company assets including inventory, accounts receivable, and intellectual property.

Positive
  • Secured larger $70M credit facility with extended maturity to 2030
  • Transition from asset-based to cash flow-based lending indicates improved financial strength
  • Competitive interest rates with favorable pricing grid
  • No outstanding debt on previous credit facility
Negative
  • New facility requires pledging substantial assets as collateral
  • Subject to stricter financial covenants and leverage restrictions

Insights

Enhanced credit facility with better terms and longer maturity strengthens JAKKS' financial flexibility and liquidity position.

The transition from an asset-based to a cash flow-based facility signals improved financial health and operational stability. The $2.5 million increase in facility size, combined with the 5-year extension in maturity to 2030, provides enhanced long-term financial flexibility. The competitive interest rate spread and covenant requirements indicate lender confidence in the company's cash flow generation ability. The shift to BMO Bank from JPMorgan Chase suggests successful relationship diversification with major financial institutions.

New credit agreement demonstrates strong creditworthiness with favorable terms and reasonable covenants.

The covenant requirements of 3.00x Interest Coverage and 2.00x Net Leverage ratios are relatively standard and indicate healthy operational metrics. The comprehensive security package, including inventory and intellectual property, provides strong protection for lenders while maintaining operational flexibility. The switch to a cash flow-based facility from asset-based lending represents a positive evolution in the company's credit profile, typically indicating more predictable cash flows and stronger financial fundamentals.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 24, 2025

 

JAKKS PACIFIC, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   0-28104   95-4527222
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification No.)

 

2951 28th Street, Santa Monica, California   90405
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (424) 268-9444

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol   Name of each exchange on which registered
Common Stock, $.001 par value   JAKK   NASDAQ Global Select Market

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

The Company and certain of its subsidiaries as borrowers and certain of its subsidiaries as guarantors, entered into a Credit Agreement (the “Credit Agreement”), dated as of June 24, 2025 (the “Closing Date”) with BMO Bank N.A. as Administrative Agent, Swing Line Lender and Letter of Credit Issuer, for a $70,000,000 first-lien secured revolving credit loan (the “Credit Facility”). The Credit Facility, which is a cash flow-based loan, replaces the Company’s existing $67,500,000 revolving credit facility maturing in June 2026 with JPMorgan Chase Bank, N.A. which was an asset-based loan (the “Existing Loan”). The new Credit Facility may be used for working capital, capital expenditures and other general corporate purposes ` No indebtedness was outstanding on the Existing Loan.

 

Amounts outstanding under the Credit Facility will bear interest at either (i) SOFR plus 1.50% - 2.00% (determined by reference to a net leverage pricing grid), or (ii) base rate plus 0.50% - 1.00% (determined by reference to a net leverage pricing grid). The Credit Facility matures in June 2030.

 

The Credit Agreement contains negative covenants that, subject to certain exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur certain additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates. The Company may not permit the Interest Coverage Ratio, measured at the end of each fiscal quarter of the Company, to be less than 3.00 to 1.00 for such Measurement Period, nor may it permit the Total Net Leverage Ratio, measured at the end of each fiscal quarter of the Company, to exceed 2.00 to 1.00.

 

The Credit Agreement contains events of default that are customary for a facility of this nature, including (subject in certain cases to grace periods and thresholds) nonpayment of principal, nonpayment of interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to certain other existing indebtedness, bankruptcy or insolvency events, certain judgment defaults and a change of control as specified in the Credit Agreement. If an event of default occurs, the maturity of the amounts owed under the Credit Agreement may be accelerated.

 

To secure its obligations under the Credit Facility, the Company also entered into a Pledge and Security Agreement dated as of the Closing Date between the Company and certain of its subsidiaries as guarantors and BMO Bank N.A. as Administrative Agent (the “Agent”) for the lenders under the Credit Agreement (the “Security Agreement”). The Security Agreement grants to the Agent, for the benefit of the Secured Parties, a security interest in a substantial amount of the Company’s consolidated assets, including its inventory, accounts receivable, intellectual property and a pledge of the capital stock of various of its subsidiaries.

 

Capitalized terms used herein and not defined herein have the meanings assigned to them in the Credit Agreement or Security Agreement, as the case may be. The foregoing descriptions of the Credit Agreement and the Security Agreement are qualified in their entireties by reference to the respective agreements attached as exhibits to this Form 8-K and incorporated by reference in this Item 1.01.

 

Item 1.02. Termination of a Material Definitive Agreement.

 

On the Closing Date, the Company repaid in full amounts due and terminated the Existing Loan, a $67,500,000 senior secured revolving credit facility with JPMorgan Chase Bank, N.A. dated as of June 2, 2021, which was scheduled to terminate in June 2026.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth under Item 1.01 of this Form 8-K with respect to the Credit Agreement is incorporated by reference into this Item 2.03.

 

Item 9.01. Financial Statements and Exhibits

 

(d)Exhibits

 

Exhibit   Description
10.1*   Credit Agreement, dated as of June 24, 2025, among JAKKS Pacific, Inc., JAKKS Sales LLC, Disguise, Inc., and Moose Mountain Marketing, Inc., as borrowers, the subsidiary guarantors party thereto, Loan Parties thereto, the Lenders party thereto and BMO Bank N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer
10.2*   Pledge and Security Agreement, dated as of June 24, 2025, by and among JAKKS Pacific, Inc. and its subsidiaries parties thereto as borrowers and/or Grantors, the lenders party thereto, as lenders, and BMO Bank N.A.as Administrative Agent
99.1   Press release dated June 25, 2025
104   Cover Page Interactive Data File (formatted as Inline XBRL)

 

 

*Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K under the Securities Act. The Company agrees to furnish supplementally any omitted schedules to the Securities and Exchange Commission upon request.

 

1

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  JAKKS PACIFIC, INC.
   
Dated: June 25, 2025  
  By: /s/ JOHN L. KIMBLE
    John L. Kimble,
    CFO

 

2

FAQ

What are the key terms of JAKK's new credit facility?

The new facility is a $70 million first-lien secured revolving credit facility with BMO Bank, maturing in June 2030. Interest rates are SOFR plus 1.50-2.00% or base rate plus 0.50-1.00%, determined by a net leverage pricing grid.

How does JAKK's new credit facility compare to its previous one?

The new facility is $2.5 million larger than the previous $67.5M facility with JPMorgan Chase. It's now cash flow-based instead of asset-based, and has a longer maturity date of June 2030 versus June 2026.

What are the main financial covenants in JAKK's new credit agreement?

The agreement requires maintaining an Interest Coverage Ratio of at least 3.00:1.00 and a Total Net Leverage Ratio not exceeding 2.00:1.00, measured quarterly.

What assets has JAKK pledged as security for the new credit facility?

JAKK has pledged substantial consolidated assets including inventory, accounts receivable, intellectual property, and capital stock of various subsidiaries as security.
Jakks Pac Inc

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188.88M
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4.75%
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SANTA MONICA