LANDS’ END, INC. (NASDAQ:LE) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
Amendment to ABL Credit Facility
On August 12, 2020, Lands’ End, Inc. (the “Company”) and certain of its subsidiaries entered into the Second Amendment to Credit Agreement (the “Second Amendment to the ABL Facility”), by and among Wells Fargo Bank, National Association (as Agent, L/C Issuer and Swing Line Lender) and each of the Company’s existing lenders under its asset based revolving credit facility. The Second Amendment to the ABL Facility amends that certain Credit Agreement, dated November 16, 2017, as previously amended by the First Amendment thereto, dated December 3, 2019 (as amended, the “ABL Credit Agreement”). The effectiveness of the Second Amendment to the ABL Facility is conditioned upon the Company paying, in full, its obligations under the Term Loan Credit Agreement, dated as of April 4, 2014, by and among the Company (as the Borrower), Bank of America, N.A. (as Administrative Agent and Collateral Agent and as Arranger and Bookrunner) and the lenders party thereto, as well as other customary closing conditions.
The Second Amendment to the ABL Facility provides for an increase in the maximum borrowings under the ABL Credit Agreement by $75 million, from $200 million to $275 million.
The interest rates per annum applicable to the loans under ABL Credit Agreement are based on a fluctuating rate of interest measured by reference to, at the Company’s election, either (1) an adjusted London inter-bank offered rate (“LIBOR”) with a minimum rate of 0.75% plus a borrowing margin, or (2) an alternative base rate (“Base Rate”) plus a borrowing margin. As amended by the Second Amendment to the ABL Facility, the borrowing margin under the ABL Credit Agreement will be subject to adjustment based on the average daily total loans outstanding under the ABL Credit Agreement for the preceding fiscal quarter. For LIBOR loans, the borrowing margin will be, where the average daily total loans outstanding for the previous quarter are (i) less than $50 million, 1.75%, (ii) equal to or greater than $50 million but less than $100 million, 2.00%, (iii) equal to or greater than $100 million but less than $200 million, 2.25%, and (iv) greater than $200 million, 3.50%. For Base Rate loans, the borrowing margin will be, where the average daily total loans outstanding for the previous quarter are (i) less than $50 million for the previous quarter, 1.00%, (ii) equal to or greater than $50 million but less than $100 million, 1.25%, (iii) equal to or greater than $100 million but less than $200 million, 1.50%, and (iv) greater than $200 million, 2.75%.
As amended by the Second Amendment to the ABL Facility, if average daily total loans outstanding for the previous quarter are (i) less than 50% of the lesser of (a) the aggregate commitments and (b) the borrowing base (the “Loan Cap”), the commitment fee percentage will equal 0.375% and (ii) equal to or greater than 50% of the Loan Cap, the commitment fee percentage will equal 0.25%. The commitment fee is computed as the applicable percentage multiplied by the actual daily amount by which the aggregate commitments exceed the total outstanding loans and letter of credit obligations in the preceding quarter.
Maintenance of Cash
The Second Amendment to the ABL Facility will add a cash maintenance provision to the ABL Credit Agreement, which applies a limit of $75 million on the amount of cash and cash equivalents (subject to certain exceptions) that the Company may hold when outstanding loans under the ABL Credit Agreement are equal to or exceed $125 million.
The Second Amendment to the ABL Facility also addresses LIBOR replacement, as well as certain compliance and administrative matters.
The foregoing description of the Second Amendment to the ABL Facility is only a summary of the material terms thereof, and does not purport to be complete.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information described in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
About LANDS’ END, INC. (NASDAQ:LE)
Lands’ End, Inc. (Lands’ End) is a multi-channel retailer of casual clothing, accessories and footwear, as well as home products. The Company operates through two segments: Direct and Retail. The Company offers products through catalogs, online at www.landsend.com. The Direct segment sells products through the Company’s e-commerce Websites, international Websites and direct mail catalogs. The Retail segment sells products and services through Lands’ End Shops at Sears across the United States, the Company’s standalone Lands’ End Inlet stores and international shop-in-shops. The Company’s product categories include Apparel and Non-apparel. The Non-apparel category offers accessories, footwear and home goods. The Company provides embroidery, monogramming, gift wrapping, shipping and other services. In addition, the Company offers sheets and pillowcases, duvet covers and comforters, blankets and throws, mattress pads, towels, rugs and mats, school uniforms and shower curtains.