The Children’s Place, a children’s specialty apparel retailer in North America, refinanced its revolving credit facility and term loan with a new lending group led by an affiliate of Wells Fargo. The new debt consists of a revolving credit facility with $350 million of availability and a $50 million term loan, both with five-year maturities, lower interest rates, reduced reporting requirements and increased flexibility under the covenants compared the prior facility.
“Our strong results provided us with the opportunity to successfully complete this refinancing on attractive terms and to accomplish a number of other important objectives, including enhancing our strong liquidity position and solidifying our balance sheet with the reduction in the amount of the term loan,” Robert Helm, CFO of The Children’s Place, said.
The revolving credit facility is secured by a first-priority lien on substantially all of the company’s U.S. and Canadian assets and a second-priority lien on the company’s intellectual property and certain furniture, fixtures and equipment. Interest on borrowings is payable monthly at LIBOR plus 1.125% or 1.375% based on the amount of the company’s average excess availability under the facility. The facility has an unused line fee of 0.2%.
The new term loan is secured by a first-priority lien on the company’s intellectual property and certain furniture, fixtures and equipment and a second-priority lien on the assets securing the new revolving credit facility. Interest is payable monthly at LIBOR plus 2.5%. The new term loan does not require amortization if certain conditions are met and is pre-payable at any time without penalty.
The company was advised on the refinancing by EY, and the lending group consists of affiliates of Wells Fargo, Bank of America, JPMorgan, Truist and HSBC.