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The cost of Pure Fishing buying Danish tackle company Svendsen Sport and its portfolio of brands has been revealed – amounting to $153.4 million in cash plus a projected extra performance-related payment of $22.5 million this summer.

Confirmation of the deal price came in a report from US-based credit ratings agency S&P Global Ratings, which also revealed Pure Fishing has added to its loans, growing its ABL revolver commitment to $250 million, issuing an incremental $100 million first-lien term loan and a $25 million second-lien term loan to allow it to purchase Svendsen

Sport.

TTW reported the acquisition earlier this year, making the world’s largest tackle business, Pure Fishing, even larger as it added brands including Savage Gear, DAM, Prologic, WaterWolf and MADCAT to its stable. At the time, no terms of the deal were released but now the true cost, along with possible implications for Pure Fishing’s business going forward, have has been revealed.

S&P said the transaction demonstrated the American-based giant’s risk for conducting acquisitions using incremental debt while macroeconomic risks remain high.

It said Pure Fishing’s leverage will likely remain very high through the remainder of the year due to increased debt, while demand for the company’s fishing and outdoor recreation products could moderate.

It said the firm had a “stable outlook” since Pure Fishing could modestly reduce its very high leverage over the coming quarters.

S&P’s report said: “Our updated forecast is for the company’s adjusted gross debt to EBITDA to be in the 7.5x to 9.25x range in 2022 [but] this could be unsustainable if there is unexpected volatility in fishing equipment demand or inadvertent operating missteps over the next two years.

“We have assumed that demand could plateau in 2022 and moderate in 2023 as consumers return to other leisure activities that were not fully available during the pandemic.

“Demand and profitability could be hurt more than our base-case assumptions by macroeconomic risks and supply-chain disruptions because the company’s sales operations are global.”

It warned that an escalation of the Russia-Ukraine conflict could lead to energy supply disruptions or price shocks, while sustained inflationary pressures or drag on economic growth following potential policy missteps by central banks could also erode profits.

The current Covid-19 containment measures in Asia, which supplies about 40 per cent of Pure Fishing’s resale products, presented an additional economic risk.

It concluded: “Despite the high financial risk, the outlook is stable because we forecast Pure Fishing will have adequate liquidity and sufficient fixed-charge coverage, mitigating the likelihood of a downgrade.

“The company had approximately $39 million in cash as of December 31st, 2021. Incorporating the ABL capacity remaining after the Svendsen acquisition, we estimate total liquidity at the end of March 2022 at about $105 million, which is adequate based on our forecast of cash uses over the next 12 to 24 months.”