Smart Balance Successfully Completes $100M Debt Refinancing

Transaction Enhances Strategic Flexibility

PARAMUS, N.J. -- Smart Balance, Inc. (NASDAQ:SMBL) , through its wholly-owned subsidiary GFA Brands, Inc., announced today the successful refinancing of its credit facility.

The new $100 million secured facility allows the Company greater flexibility in strategic areas such as acquisitions and capital structure with greater available credit and less restrictive financial covenants than its previous facility.

"We are pleased with the strong demonstration of support by the banking community in our ongoing performance and strategic outlook," said Alan Gever, Smart Balance Executive Vice President and Chief Financial Officer. "The current favorable environment allowed us to create a facility that enables us to consider strategic alternatives to enhance shareholder value in the years ahead. While the new financial covenants increase our flexibility, we still expect to meet the previous covenants due to the strength of our expected performance in 2009 and beyond."

The Company's new credit facility is comprised of a $55 million term loan and a $45 million revolver, both of which mature in November 2013. The overall effective interest rate on the new facility will initially be approximately 5%. The previous facility consisted of two term loans totaling $160 million and a $20 million revolver, which were scheduled to mature in 2014. As of September 30, 2009, outstanding debt under the previous facility totaled $64.5 million. It is expected that future interest expense for the new facility would be equivalent versus the previous facility.

The definitive credit agreement which includes the specific terms and covenants governing the Company's new credit facility will be included in a Current Report on Form 8-K to be filed by the Company with the Securities and Exchange Commission.

The new facility, along with approximately $10 million in cash on hand from operations, was used to retire the previous debt outstanding and an interest rate swap, and pay transaction-related costs. After the close of the transaction, total debt outstanding was $60.6 million including $5.6m million in borrowings under the revolver and an available cash balance of approximately $5 million.

BMO Capital Markets led the refinancing transaction in a seven-bank consortium.