“We are extremely pleased to announce the closing of our amended credit facility. In addition to extending the maturity to four years from three years, the amended credit facility provides us with a higher advance rate on our receivables portfolio. The combination of better economic terms and smaller facility size is expected to save over $1 million per year in interest expense,” stated Norm Miller, Conn’s chairman and CEO.
According to a related 8-K filing, the amended facility includes the following changes:
- Extension of the maturity date to May 23, 2022
- Modification of the method by which the applicable margin is calculated to be based on the total leverage ratio (ratio of total liabilities less the sum of qualified cash and ABS qualified cash to tangible net worth), with the applicable margin ranging from 2.50% to 3.25% for LIBOR loans and from 1.50% to 2.25% for base rate loans
- Elimination of a $10 million availability block in calculating the borrowing base
- Increase in the maximum accounts receivable advance rate from 75% to 80%;
- A25 basis point decrease in the maximum unused line fee from 75 basis points to 50 basis points
- Elimination of the cash recovery covenant;
- Modification to the maximum inventory component of the borrowing base from $175 million to 33.33% of revolving loan commitments in effect
- Modification to the interest coverage covenant such that the minimum interest coverage on a trailing two quarter basis is 1.5x and the minimum interest coverage during any single quarter is 1.0x
- Increase in the maximum capital expenditures from $75 million to $100 million during any period of four consecutive fiscal quarters
JPMorgan, Regions Bank and MUFG served as co-syndication agents. Bank of America, J.P. Morgan Securities, Regions Capital Markets and MUFG were joint lead arrangers and joint bookrunners. BBVA Compass was documentation agent.
The amended facility will continue to provide for a $40 million sub-facility for letters of credit. IT provides funding based on a borrowing base calculation that includes customer accounts receivable and inventory.
Conn’s is a specialty retailer of furniture, home appliances, consumer electronics and home office equipment, currently operating 118 retail locations in Alabama, Arizona, Colorado, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia.