Although no changes have been made to the Original Filing other than to amend the information set forth above, the Original Filing is being amended and restated in its entirety.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Drawdown of Secured Revolving Credit Facility
As previously disclosed, Haverty Furniture Companies, Inc. (the “Company”) has an Amended and Restated Credit Agreement, dated as of September 27, 2019 (the \”Credit Agreement\”), among the Company, the borrowing subsidiary party, the lenders party thereto and Truist Bank (as successor by merger to SunTrust Bank), as administrative agent and issuing bank. The Credit Agreement provides for a revolving credit facility of $60.0 million (the “Revolving Credit Facility”), and is secured by inventory, accounts receivable, cash and certain other personal property. Availability fluctuates under a borrowing base calculation and is reduced by outstanding letters of credit. The material terms of the Credit Agreement are described under \”Note 6, Credit Arrangement\” in the notes to financial statements in our Annual Report on Form 10-K for the year December 31, 2019.
The Company has not had any amounts outstanding under the Credit Agreement or its predecessor agreements, originating in 2008. The Company provided notice to the administrative agent on March 17, 2020 to borrow $25.0 million and on March 20, 2020 to borrow $18.8 million under the Revolving Credit Facility. The Company may repay amounts borrowed at any time without penalty. As a result of the borrowings described, there is currently a $10.5 million unused borrowing capacity under the Revolving Credit Facility.
The interest rate on the outstanding balance from time to time of the Revolving Credit Facility is based upon, at the Company’s option, either: (i) the Eurodollar rate or (ii) the base rate, in each case, plus an applicable margin. Such applicable margin is a percentage per annum of 1.50% for average availability less than $30.0 million or 1.25% for average availability greater or equal to $30.0 million. The current interest rate for borrowings under the Revolving Credit Facility is the three-month Eurodollar LIBOR rate plus 1.50%.
The Company initiated its borrowings under the Revolving Credit Facility as a precautionary measure in order to increase its cash position and preserve financial flexibility considering current uncertainty in the global markets resulting from the COVID-19 outbreak. The proceeds from the Revolving Credit Facility borrowings are currently being held on the Company’s balance sheet. In accordance with the terms of the Credit Agreement, the proceeds from the Revolving Credit Facility borrowings may in the future be used for working capital, general corporate or other purposes permitted by the Credit Agreement.
About HAVERTY FURNITURE COMPANIES, INC. (NYSE:HVT)
Haverty Furniture Companies, Inc. is a specialty retailer of residential furniture and accessories. The Company sells home furnishings in its retail stores and through its Website havertys.com. The Company has over 120 stores in approximately 20 states in the southern and Midwest regions with over 4.4 million square feet retail store space. It offers financing through an internal revolving charge credit plan as well as a third-party finance company. Its retail locations are operated using the Havertys name. It offers mattress product lines, such as Selay, Serta, Stearns and Foster, and Tempur-Pedic. The Company’s customers are college educated women in middle to upper-middle income households.
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