Barnes & Noble Education, a provider of solutions for the education industry, entered into a definitive agreement with Immersion Corporation and its exiting shareholders on the terms of new equity and refinancing transactions, including receiving commitments to refinance its existing asset-backed loan facility pursuant to an agreement with its first lien holders.
The refinancing provides the company with access to a $325 million facility maturing in 2028. The facility will initially have an applicable margin with respect to the interest rate of 3.5% per annum, in the case of interest accruing based on SOFR, and 2.5%, in the case of interest accruing based on an alternative base rate. Following the one-year anniversary, the applicable margin shall be reduced one time by 25 basis points per annum if certain financial metrics are met.
The ABL facility refinancing occurred in conjunction of new equity transactions, including $95 million of new equity capital and the conversion of approximately $34 million of outstanding principal and any accrued and unpaid interest into Barnes & Noble Education common stock by the company’s second lien lenders, affiliates of Fanatics, Lids and VitalSource. The transactions are expected to close in June.
In addition, Barnes & Noble Education also entered into an amendment to its credit agreement to amend certain financial covenants to provide additional financial flexibility ahead of the expected closing of the transactions.
“Today’s announcement marks a significant milestone in our strategic review process and, we believe, represents the best path forward for our shareholders, employees and the students, institutions, alumni, fans and communities we serve,” Michael Huseby, CEO of Barnes & Noble Education, said. “BNED is a critical part of the education ecosystem, and we are confident that this transaction will allow us to grow our business profitably as we enhance our market leading offerings and build on the strong momentum of First Day and our other key programs.”
“With a stronger financial foundation, we will be well positioned to advance our industry leadership by continuing our focus on delivering innovative solutions, an unmatched merchandise assortment and the best-in-class omnichannel customer experience for our valued school partners,” Jonathan Shar, executive vice president of Barnes & Noble Education Retail and president of Barnes & Noble College.
