RumbleOn, RideNow receive loan commitment backing merger

RumbleON Inc. and powersports dealer Ridenow Powersports announced plans to merge to form an online acquisition and distribution platform for powersports.

Funds managed by Oaktree Capital Management will provide debt financing toward the $280 million cash component with the remainder of new equity, according to a March 15 statement from the companies. Under terms of the agreement, total consideration is $575 million, consisting of $400 million in cash and 5.8 million of RumbleOn class B common shares.

Of the debt financing, Oaktree and affiliated funds agreed to provide up to $400 million of term loans, of which $280 million is an initial advance and $120 million is a delayed-draw term loan. Interest is L+725, plus 1% payable in-kind. Maturity is five years on the loans.

As part of the transaction, an affiliate of B. Riley Securities Inc. provided a $2.5 million bridge loan via a secured promissory note. Interest is 12%.

The transaction, subject to completion of the debt and equity, as well as shareholder and regulatory approval, is expected to close in the second or third quarter of 2021.

The combined company generated respective $1.3 billion and $91 million in pro forma revenue and adjusted EBITDA in 2020. The combined company "will be positioned to further consolidate the highly fragmented powersports industry."

RideNow is the largest powersports retailer in the U.S., with 2020 sales of 45,527 units, including ATVs, motorcycles, snowmobiles and personal watercraft. RumbleOn is a commerce platform for buying, selling, trading or financing a vehicle.