Hanesbrands enters into amended, restated $1.6 billion credit facility

By Toni Weeks

San Luis Obispo, Calif., July 31 – Hanesbrands Inc. and wholly owned subsidiary MFB International Holdings Sarl entered into a second amended and restated credit agreement on Wednesday that provides for a $1.6 billion credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The facility includes a $1.1 billion revolving loan facility and one or more tranches of term loans, including an uncommitted tranche of term loans available in an amount equal to the euro equivalent of $500 million.

The term loan will mature seven years after the closing of Hanesbrands’ planned acquisition of DBApparel France. Borrowings bear interest at Euribor plus 275 basis points.

Outstanding borrowings under the term loan will be repayable in 0.25% quarterly installments, with the balance to be repaid at maturity. There is a 1% prepayment fee if the term loan is refinanced or repriced within the first six months and the interest rate decreases as a result.

Proceeds of the term loan will be used to fund the acquisition of DBA Lux Holding SA.

The revolver matures on July 23, 2018. The interest rate is Libor plus 150 bps to 225 bps. The exact margin is based on the company’s leverage ratio.

A portion of the revolver is available for the issuance of letters of credit and swingline loans.

The proceeds of the revolver may be used for general corporate purposes and working capital.

The agreement requires that the company maintain a minimum interest coverage ratio such that the ratio of EBITDA for the preceding four fiscal quarters to its consolidated total interest expense not be less than 3.25 to 1.00 for any fiscal quarter. The company must also maintain a maximum ratio of total debt to EBITDA such that the ratio for the preceding four fiscal quarters is not more than 4.00 to 1.00 through the third fiscal quarter of 2015 and 3.75 to 1.00 thereafter.

The company may add one or more tranches of term loans or increase commitments under the revolver as long as, among other things, its senior secured leverage ratio is less than 2.50 to 1.00 on a pro forma basis after giving effect to the incurrence of such debt.

JPMorgan Chase Bank, NA is the administrative agent and collateral agent, and J.P. Morgan Ltd., Barclays Bank plc and HSBC Securities (USA) Inc. are the joint lead arrangers and joint bookrunners. SunTrust Bank and Branch Banking & Trust Co. are the co-documentation agents. Bank of America, NA and PNC Bank, NA are the co-syndication agents.

Hanesbrands is a Winston Salem, N.C.-based marketer of everyday basic apparel.

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