Document Management

Parsippany, N.J. - Jackson Hewitt Tax Services, which got blindsided by the exit of Santa Barbara Bank & Trust Co. from the refund loan business in December, has renewed its own loans and said it would cut 15 percent of its jobs. The company made $90 million in loan payments while its lenders changed their credit terms and it avoided a possible default. A prepared statement said Jackson Hewitt has retained Moelis & Co., one of its advisors in the credit negotiations "to assist Jackson Hewitt in examining a range of strategic and financial alternatives going forward." The company did not state how many employees were affected. When it filed its form 10-K with the SEC in July it said there were 335 full-time employees.

Jackson Hewitt was able to get funding for only 50 percent of its RAL loans, which caused a loss of business as taxpayers went elsewhere. At the end of April, the company was able to make a $25 million principal repayment on a $225 million amortizing term loan and then made another $65 million payment to reduce the $139 million outstanding on a $175 million revolving credit facility.

After the payments, the latter was changed so that $105 million would continue to be a revolving credit facility with the remaining $70 million reclassified as a non-revolving credit commitment. Combined with the $200 million term loan, the tax chain has $375 million in credit.

Jackson Hewitt said the layoffs would cause it to take a $1 million pre-tax severance charge for the fourth quarter ending April 30, but would save $5 million in expenses annually. However, the changed credit terms will produce additional interest expense of $20 million to $25 million for fiscal 2011.

• Prev
• Next