PNC Bank served as administrative agent and PNC Capital Markets served as joint lead arranger and joint bookrunner on a $400 million, five-year asset-based revolving credit facility for Designer Brands. The facility replaced an existing $400 million cash flow revolver. The new ABL revolver matures in August 2025.
Designer Brands opened the new ABL revolver with a draw at closing of $150 million. The ABL revolver contains a covenant regarding minimum availability and provides additional flexibility compared with the cash flow revolver. The ABL revolver also allows Designer Brands to enter into other select financing arrangements, including a new senior secured term loan.
According to an 8K filed with the SEC, Sixth Street Specialty Lending served as administrative agent and lead arranger on a $250 million senior secured term loan for Designer Brands. The term loan will be used to increase liquidity and support the ongoing needs of the company. The term loan, which matures in August 2025, contains certain customary affirmative and negative covenants and requires limited amortization over the course of the loan.
“As a result of the actions we have undertaken with our lending partners, we are confident we have sufficient liquidity today, and in the future, to provide us with the flexibility to navigate the current complex environment and pursue our long–term business strategy,” Jared Poff, CFO of Designer Brands, said.
“Since confronted with the challenges posed by COVID-19, we have acted decisively to prioritize the health and safety of our associates and customers and protect the long-term sustainability of our business,” Roger Rawlins, CEO of Designer Brands, said. “Today’s announcement represents another critical step that increases our financial flexibility and total liquidity. These actions, combined with previously announced steps to manage expenses including the initial furloughs and recent internal organization restructuring, will strengthen our position as we continue to navigate the rapidly evolving consumer landscape.
“In the face of adversity across the industry, we have had to take a new and creative approach to running our business, driven by the acceleration of our digital initiatives to meet our customer’s unique needs. Our strong and experienced team continues to guide Designer Brands through the challenges associated with the pandemic and we expect to emerge well-positioned to grow market share and attract new customers.”
PJ Solomon server as Designer Brands’ financial advisor across all liquidity efforts. Vorys, Sater, Seymour and Pease advised the company with respect to the ABL revolver and Wachtell, Lipton, Rosen & Katz advised the company with respect to the term loan.
Designer Brands is designer, producer and retailer of footwear and accessories.