Rent-A-Center amended its credit agreement with its existing bank group. The amended credit facility, which extends through March 2019, provides the company with the additional liquidity and flexibility needed to execute its strategic plan to drive growth and improve profitability.

According to a related 8-K filing, JPMorgan Chase is administrative agent for the syndicate. Lenders include Bank of America, BBVA Compass Bank, Wells Fargo and SunTrust.

The amended credit facility will replace the existing maintenance covenants with a single fixed charge coverage test, which requires a minimum level of availability of $50 million if the test is not met. At closing, the company had total borrowings of $70 million and letters of credit and reserves of $101.8 million against the $350 million revolver. This leaves the company with $178.2 million of availability. The company expects to fund the business through cash provided by operations for the remainder of 2017.

Key features of the amendments include:

  • Fixed charge coverage ratio tested monthly; when less than 1.10x, the company must maintain $50 million of excess availability on the revolver
  • Revolver size of $350 million, with an expansion feature of an additional $100 million
  • The company has $178.2 million of availability at closing
  • The existing term loan B, which currently has $50.3 million outstanding, will remain in place
  • Asset-backed features that govern the size of the available borrowing base determined by the value of eligible rental agreements and inventory held for rent
  • Pricing is substantially the same as the existing agreement, with the addition of a pricing tier when leverage is above 4.00x

Plano, TX-based, Rent-A-Center provides its customers with durable products such as consumer electronics, appliances, computers, furniture and accessories, under flexible rental purchase agreements with no long-term obligation.