Jackson HewittParsippany, 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.

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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