Blue Nile, Inc. (NASDAQ:NILE) Files An 8-K Entry into a Material Definitive Agreement

Blue Nile, Inc. (NASDAQ:NILE) Files An 8-K Entry into a Material Definitive Agreement

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Item1.01.

Entry into a Material Definitive Agreement.

On February17, 2017, the Company, as the surviving corporation of
the Merger and Parent entered into (i)a Term Loan Credit
Agreement, dated as of February17, 2017 (the Term Loan Credit
Agreement
), with the Company, as Borrower (as defined
therein), the financial institutions from time to time party
thereto, as lenders (the Term Loan Lenders), and Goldman
Sachs Bank USA, as the Administrative Agent and Collateral Agent
(Term Loan Agent) and a Term Loan Lender, providing for
term loans in aggregate principal amount of $185,000,000 (the
Term Loans) and (ii)an ABL Credit Agreement, dated as of
February17, 2017 (the ABL Credit Agreement), with the
Company, as the Borrower Representative (as defined therein), the
Subsidiary Borrowers (as defined therein) from time to time party
thereto, the financial institutions from time to time party
thereto, as lenders (the ABL Lenders), and Goldman Sachs
Bank USA, as the Administrative Agent, Collateral Agent (ABL
Agent
), the Swingline Lender, an Issuing Bank and an ABL
Lender, providing for an asset-based revolving credit facility
with commitments of $50,000,000 (the ABL Facility) and a
swingline subfacility and letter of credit subfacility.
Concurrently with the consummation of the Merger, the full amount
of the Term Loans was drawn, and no amount under the ABL Facility
was drawn. The Term Loan Credit Agreement also permits the
Borrower to request one or more additional term loans or
revolving credit commitments at any time after the closing,
subject to the terms and conditions set forth therein.The ABL
Credit Agreement also permits the Borrowers to increase the
revolving credit commitment under the ABL Credit Agreement at any
time after the closing, subject to the terms and conditions set
forth therein.

Term Loan Credit Agreement

Interest Rate and Fees

At the Companys election, the interest rate per annum applicable
to the loans under the Term Loan Credit Agreement will be either
(a)in the case of ABR loans, a fluctuating rate per annum
determined by reference to the highest of (i)the federal funds
effective rate for such day plus 1/2 of 1%, (ii) the prime rate
announced by Goldman Sachs Bank USA for such day and (iii)a LIBOR
rate determined by reference to LIBOR on the applicable Reuters
screen page at approximately 11:00 a.m., London time, two
business days prior to the commencement of the applicable
interest period, for Dollar deposits with a term of one month
commencing that day, plus 1.00%, subject to an ABR rate floor of
2.00%, plus an applicable margin of 5.50%, or (b)in the case of
LIBOR loans, a LIBOR rate determined by reference to LIBOR on the
applicable Reuters screen page at approximately 11:00 a.m.,
London time, two business days prior to the commencement of the
applicable interest period, for Dollar deposits with a term
equivalent to such interest period, subject to a LIBOR floor of
1.00%, plus an applicable margin of 6.50%.

Prepayments

Subject to certain exceptions and other limitations, the Term
Loans are subject to mandatory prepayments in amounts equal to:
(i)50% of the net cash proceeds from certain non-ordinary course
sales or other dispositions of assets or casualty events in
excess of a threshold amount and subject to customary

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reinvestment provisions and certain other exceptions; (ii)50% of
the net cash proceeds from the incurrence of debt by the Borrower
or any restricted subsidiaries (other than indebtedness permitted
by the Term Loan Credit Agreement); and (iii)beginning with the
fiscal year ending on or about December31, 2018, 50% (with
step-downs to 25% and 0% based upon achievement of specified
consolidated senior secured net leverage ratios) of the annual
excess cash flow of the Borrower and its subsidiaries. Subject to
certain conditions, the Company may voluntarily prepay
outstanding Term Loans at any time.

Amortization

The Term Loans initially have a six-year maturity, which may
be extended in accordance with the terms of the Term Loan Credit
Agreement. The principal amount of the Term Loans amortizes in
quarterly installments of $2.3million beginning at the end of the
quarter ending on or about September30, 2017, with the balance
payable at maturity.

Guaranty and
Security

In connection with
the Term Loans, Parent, the Company and certain subsidiaries of
the Company, as guarantors (the Guarantors) entered into
(i)a Term Loan Guarantee, dated as of February17, 2017, with the
Term Loan Agent for the benefit of the Term Loan Lenders, to
which Parent and the Guarantors guaranteed the obligations of the
Borrower under the Term Loans, and (ii)a Term Loan Security
Agreement, dated as of February17, 2017, with the Term Loan Agent
for the benefit of the Term Loan Lenders, to which amounts
borrowed by the Borrower under the Term Loans are secured on a
(i)first priority basis by a security interest in all assets of
the credit parties other than accounts receivable, cash, deposit
accounts and security accounts, any inventory, intellectual
property in connection with the sale of inventory and letter of
credit rights, commercial tort claims, chattel paper, supporting
obligations, general intangibles (including contract rights and
customer lists), documents, books, records and instruments
relating to the foregoing and (ii)second priority basis by a
security interest in all accounts receivable, cash, deposit
accounts and security accounts, any inventory, intellectual
property in connection with the sale of inventory and letter of
credit rights, commercial tort claims, chattel paper, supporting
obligations, general intangibles (including contract rights and
customer lists), documents, books, records and instruments
relating to the foregoing, in each case, subject to certain
customary exceptions.

Certain
Covenants and Events of Default

The Term Loan
Credit Agreement contains a number of customary affirmative and
negative covenants that, among other things, will limit or
restrict the ability of the Borrower and each restricted
subsidiary, subject to certain exceptions, to: incur additional
indebtedness (including guarantees); incur liens; engage in
certain fundamental changes (other than to the transactions
contemplated by the Merger Agreement); sell assets; pay dividends
and make other payments in respect of capital stock; make certain
investments, loans, advances; create restrictions on
distributions from the restricted subsidiaries that are not
guarantors; amend junior debt documents; and engage in certain
transactions with affiliates. In addition, the Term Loan Credit
Agreement requires that the Borrower comply with a specified
consolidated senior secured net leverage ratio.

The Term Loan
Credit Agreement contains customary events of default, including
nonpayment of principal, interest or other amounts; material
inaccuracy of a representation or warranty when made; violation
of a covenant; cross-default to material indebtedness (other than
the ABL Facility); cross-acceleration to the ABL Facility;
bankruptcy events; certain ERISA events; material impairments of
the guarantees and/or security; material unsatisfied judgments;
and a change of control. Failure to comply with the consolidated
senior secured net leverage ratio or the other provisions of the
Term Loan Credit Agreement (subject to certain grace periods and
customary cure rights) could, absent a waiver or an amendment
from the Term Loan Lenders, permit the acceleration of all
outstanding borrowings under the Term Loan Credit
Agreement.

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ABL
Credit Agreement

Borrowing
Base

On any date of
determination, the Borrowing Base under the ABL Credit Agreement
shall be equal to (a) 90% of the value of eligible credit card
receivables of any credit party; plus (b)the lesser of (i)
80% of the value of eligible inventory of any credit party and
(ii) 85% of the net orderly liquidation value of eligible
inventory of any credit party; plus (c)the amount of
qualified cash of any credit party; minus (d)any
reserves;

Interest Rate
and Fees

At the Companys
election, the interest rate per annum applicable to the loans
under the ABL Credit Agreement will (1)until the last day of the
first full fiscal quarter following the closing date be either
(a)in the case of ABR loans, a fluctuating rate per annum
determined by reference to the highest of (i)the federal funds
effective rate for such day plus 1/2 of 1%, (ii) the prime rate
announced by Goldman Sachs Bank USA for such day and (iii)a LIBOR
rate determined by reference to LIBOR on the applicable Reuters
screen page at approximately 11:00 a.m., London time, two
business days prior to the commencement of the applicable
interest period, for Dollar deposits with a term of one month
commencing that day, plus 1.00% , (the ABR Rate) plus an
applicable margin of 1.25%, or (b)in the case of LIBOR loans, a
LIBOR rate determined by reference to LIBOR on the applicable
Reuters screen page at approximately 11:00 a.m., London time, two
business days prior to the commencement of the applicable
interest period, for Dollar deposits with a term equivalent to
such interest period (the LIBOR Rate;) plus an applicable margin
of 2.25% (provided, in no event, shall the LIBOR Rate be less
than zero) and (2)thereafter shall bear interest at the election
of the Company at either the ABR Rate or the LIBOR Rate plus a
margin determined by reference to a pricing grid based on average
daily excess availability.

Prepayments

The ABL Facility
is subject to a mandatory prepayment, if, at any time, the amount
of borrowings by the Borrowers under the ABL Facility exceeds the
maximum amount available for borrowing under the ABL
Facility.

Amortization

The ABL Facility
initially has a five-year maturity, which may be extended in
accordance with the terms of the ABL Credit Agreement.

Guaranty and
Security

In connection with
the ABL Facility, Parent, the Company and certain subsidiaries of
the Company, as guarantors (the Guarantors) entered into
(i)an ABL Guarantee, dated as of February17, 2017, with the ABL
Agent for the benefit of the Secured Parties, to which Parent and
the other Guarantors guaranteed the obligations under the ABL
Facility, and (ii)an ABL Security Agreement, dated as of
February17, 2017, with the ABL Agent for the benefit of the
Secured Parties, to which amounts borrowed by the Borrowers under
the ABL Facility are secured on a (i)first priority basis by a
security interest in all accounts receivable, cash, deposit
accounts and security accounts, any inventory, intellectual
property in connection with the sale of inventory and letter of
credit rights, commercial tort claims, chattel

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paper, supporting
obligations, general intangibles (including contract rights and
customer lists), documents, books, records and instruments
relating to the foregoing and (ii)a second priority basis by a
security interest in all other present and after acquired assets
of the Guarantors, in each case, subject to certain customary
exceptions.

Certain
Covenants and Events of Default

The ABL Credit
Agreement contains a number of customary affirmative and negative
covenants that, among other things, will limit or restrict the
ability of the Borrower and each restricted subsidiary, subject
to certain exceptions, to: incur additional indebtedness
(including guarantees); incur liens; engage in certain
fundamental changes (other than to the transactions contemplated
by the Merger Agreement); sell assets; pay dividends and make
other payments in respect of capital stock; make certain
investments, loans, advances; create restrictions on
distributions from the restricted subsidiaries that are not
guarantors; amend junior debt documents; and engage in certain
transactions with affiliates. In addition, the ABL Credit
Agreement requires the Borrower to comply with a fixed charge
coverage ratio if certain conditions are not satisfied.

The ABL Credit
Agreement contains customary events of default, including
nonpayment of principal, interest or other amounts; material
inaccuracy of a representation or warranty when made; violation
of a covenant; cross-default to material indebtedness; bankruptcy
events; certain ERISA events; material impairments of the
guarantees and/or security; material unsatisfied judgments; and a
change of control. The Borrowers ability to borrow under the ABL
Facility will be dependent on, among other things, its compliance
with the minimum fixed charge coverage ratio (to the extent
tested) and maintenance of a sufficient borrowing base to support
its utilization of the ABL Facility. Failure to comply with the
fixed charge coverage ratio (to the extent tested) or the other
provisions of the ABL Credit Agreement (subject to certain grace
periods and customary cure rights) could, absent a waiver or an
amendment from the ABL Lenders, restrict the availability of the
ABL Facility and permit the acceleration of all outstanding
borrowings under the ABL Credit Agreement.

Item2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Arrangement of a
Registrant.

The information
set forth under Item 1.01 is incorporated by reference
herein.

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About Blue Nile, Inc. (NASDAQ:NILE)

Blue Nile Inc. is a United States-based online jeweler. The Company primarily sells diamonds and fine jewelry online. The Company offers signature diamonds, such as Round, Princess, Emerald, Asscher, and Cushion Hearts & Arrows. The Company offers a range of engagement ring collections, such as Solitaire, Halo, Vintage, Diamond Sidestones, Sapphire Sidestones, Three-Stone, Diamond Preset and Gemstone Preset. The Company offers designer engagement rings, such as Colin Cowie, Monique Lhuillier, Truly Zac Posen and Blue Nile Studio. It offers women’s weddings rings, such as Diamond, Eternity, Signature Diamond, Platinum, 18k Gold, 14k Gold, White Gold, Yellow Gold, Rose Gold and Engraveable. It offers men’s weddings rings, such as Platinum, 18k Gold, 14k Gold, White Gold, Yellow Gold, Rose Gold, Palladium, Tungsten, Cobalt, Tantalum and Engraveable. The Company also earrings, rings, necklaces, bracelets, Birthstone Jewelry, Engraveable Gifts and Anniversary gifts, among others.

Blue Nile, Inc. (NASDAQ:NILE) Recent Trading Information

Blue Nile, Inc. (NASDAQ:NILE) closed its last trading session 00.00 at 40.71 with 82,674 shares trading hands.

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