Broder Bros. revolver amendment revises size and pricing

By Sara Rosenberg

New York, April 13 - Broder Bros. Co.'s amendment to its revolving credit facility reduced the size of the loan to $200 million, changed pricing and added a 1.5% Libor floor, according to an 8-K filed with the Securities and Exchange Commission on Monday.

Pricing on the revolver is now Libor plus 400 basis points. After May 31, however, the spread may drop to Libor plus 375 bps based upon average excess availability.

The unused fee was increased to 75 bps.

In addition, the amendment revised the borrowing base to provide for a seasonal stretch tranche of up to $13.5 million through April 30 and up to $10 million through May 31.

Covenants were also changed in connection with the amendment. There is now a minimum fixed-charge coverage ratio equal to 1.22 to 1.00 as of the end of the first quarter 2009, 1.14 to 1.00 as of the end of the second quarter 2009, 1.10 to 1.00 as of the end of the third quarter 2009, and 1.00 to 1.00 as of the end of the fourth quarter 2009. For fiscal year 2010 and 2011, the minimum fixed-charge coverage ratio will be released if the company has equal to or greater than 20% excess availability for 10 consecutive days, but if there is less than 20% excess availability, a minimum fixed-charge coverage ratio of 1.00 to 1.00 will apply at all times.

As was previously reported, the amendment also allows the company to carry out an exchange offer for its 11¼% senior notes due 2010 and waives defaults that have occurred or may occur before the exchange closes, allowing the company continued access to the revolver.

Specifically, the banks have waived any default arising from the delay in delivering the company's 2008 audited financial statements and any default that would occur if the company does not pay interest due April 15 on the senior notes until May 15.

Furthermore, the amendment permits a change of control, which may result from the issuance of stock in connection with an exchange offer.

The amendment was completed on April 9.

Bank of America is the administrative agent on the deal.

Broder Bros. is a Trevose, Pa., distributor of imprintable activewear to the screen printing, embroidery and promotional product industries.

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