Designer Brands enters $550 million five-year asset-based revolver

By Marisa Wong

Los Angeles, April 5 – Designer Brands Inc. entered into a credit agreement on March 30 with Huntington National Bank as administrative agent for an up to $550 million asset-based revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The revolver may be increased by up to $100 million.

The credit facility includes a Canadian sublimit of up to $55 million.

The agreement also provides for swingline loans of up to $55 million if drawn under the U.S. borrowing base and up to $5.5 million if drawn under the Canadian borrowing base, as well as issuance of standby or commercial letters of credit of up to $75 million.

The credit facility is secured by a first-priority lien on some other personal property of the borrowers and the guarantors, including inventory.

The facility matures on March 30, 2027.

Borrowings will bear interest at term SOFR plus an applicable rate. The applicable rate was 150 bps at closing.

The unused commitment fee is 25 bps per year.

The credit agreement requires the company to maintain a consolidated fixed-charge coverage ratio during any period (i) commencing when availability is less than the greater of $41.25 million and 10% of the maximum credit amount and (ii) ending when availability is greater than or equal to $41.25 million and 10% of the maximum credit amount, in either case, for a period of 30 consecutive days.

Loan proceeds may be used to refinance existing debt, to provide working capital and for general corporate purposes.

Huntington National Bank, Bank of Montreal and Bank of America, NA are the joint bookrunners and joint lead arrangers, with PNC Bank, NA as documentation agent.

On March 30, the company terminated its existing credit agreement dated Aug. 7, 2020 with PNC Bank. The former credit agreement provided for a secured revolving credit facility of up to $400 million that would have matured on Aug. 7, 2025.

Designer Brands, based in Columbus, Ohio, designs, produces and retails footwear and accessories.

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