bebe stores entered into a credit agreement providing for a five-year senior secured term loan of $25 million with an additional drawdown capacity of up to $10 million with SLR Credit Solutions. bebe stores will use proceeds of the financing to retire its existing secured term loan of $22 million and for additional growth capital purposes.
In conjunction with the financing, bebe stores agreed to purchase eight additional Buddy’s Home Furnishings rent-to-own franchises from Franchise Group. The eight franchises, located in Kentucky and Indiana, complement bebe stores’ existing footprint in the Southeast U.S. and leverages its existing back-office infrastructure.
In addition, the company’s board of directors authorized and declared an increase to the company’s quarterly cash dividend on the company’s common stock to $0.15 per share from the previous quarterly dividend of $0.06 per share implemented during Q2/20. The quarterly dividend is payable Sept. 24 to shareholders of record as of Sept. 10.
“This refinancing allows us to meaningfully lower our cost of capital while providing further financial flexibility to execute on our strategy to deliver future growth from our platform,” Manny Mashouf, CEO of bebe stores, said. “The increase in our quarterly dividend represents the strong operating results from our brand licensing properties and our positive outlook for the 47 Buddy’s Home Furnishings rent-to-own franchises we acquired in November 2020, in line with our stated goal of providing a strong dividend to our shareholders.”
“We are excited to partner with Manny and the entire bebe management team to help facilitate the growth of their business,” Cheryl Carner, senior managing director and head of originations at SLR Credit Solutions, said.
Loans under the credit facility will bear interest at LIBOR (subject to a 1% floor) plus 5.5%, with a reduction to 5.25% after one year to the extent the company’s leverage ratio is at or less than 1.5:1. The credit facility will be secured by substantially all assets of the company and its subsidiaries.
