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Niwot, Colorado-based Crocs Inc. ( CROX - Snapshot Report ) , a shoe manufacturer, in a bid to enhance the company’s financial flexibility, has entered into a new five-year unsecured revolving credit agreement with PNC Bank, a member of The PNC Financial Services Group, Inc ( PNC - Analyst Report ) .
The new $70 million revolving credit line facility is expected to mature in December 2016 and other investment bankers, including JP Morgan Chase Bank and Wells Fargo Bank are also participating in this agreement.
The credit agreement replaces the company's existing asset backed revolving credit facility worth $30 million, scheduled to mature in September 2014. The $30 million credit was also financed by PNC Bank. We believe that the new credit facility will supplement the company’s available fund and extend the maturity period of its debt.
Under the new credit facility, the company will be able to borrow funds at various levels of interest rates. The company will utilize this fund for future growth based on sustained upside in wholesale, higher product-driven average selling price, direct channel development and geographic expansion.
Crocs ended its third quarter 2011 with cash and cash equivalents of $220.4 million, compared with $145.6 million at the end of December 2010. Net Deferred tax liabilities, stood at $16.3 million compared with $18.5 million at the end of December 2010.
The company’s cash position appears to be strong and Crocs anticipates that its current cash and cash equivalent balance will be sufficient to meet the business requirement for the next twelve months.
Though the company faces certain seasonal challenges in the fourth-quarter, management expects 2012 to reflect strong growth based on investment in new retail stores, continued kiosk transitions and shift toward a global, 12-month brand.
Crocs, which competes with Deckers Outdoor Corp ( DECK - Analyst Report ) and Nike Inc (NKE), currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
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