Tuesday Morning enters credit agreement for $120 million

By Mary-Katherine Stinson

Lexington, Ky., May 12 – Tuesday Morning Corp. and Tuesday Morning, Inc., as borrower, entered a new ABL credit agreement for a total of $120 million on May 9, according to an 8-K filing with the Securities and Exchange Commission.

The new ABL credit agreement is comprised of a $110 million revolving credit facility with a $10 million sublimit for swingline loans and a $25 million sublimit for letters of credit and two first-in last-out term loan facilities, FILO A facility and FILO B facility, for a total of $5 million each.

The credit facility will mature on the earlier of May 9, 2027 and 91 days prior to maturity of the term loan.

The new ABL facility will bear interest at adjusted term SOFR plus the applicable margin from 125 basis points to 275 bps for SOFR loans, depending on the company’s average quarterly borrowing availability, with a 0% floor.

The FILO A facility will bear interest at adjusted term SOFR plus 300 bps with a 1% floor.

The FILO B facility will bear interest at adjusted term SOFR plus a margin ranging from 850 bps to 900 bps, in each case with margins depending on seasonal periods, with a 1% floor.

At closing, the company borrowed $75.2 million under the new ABL facility, $5 million under the FILO A facility and $5 million under the FILO B facility.

Also on May 9 the company amended its term loan agreement to consent to the loan repurchase, waive and forgive interest owed to each lender and to immediately cancel the term loans upon the completion of the loan repurchase.

The new agreement stipulates that the borrower and subsidiaries must maintain borrowing availability to the greater of $7.5 million and 7.5% of the modified revolving loan cap.

Additionally, the amendment allows the company to request an additional incremental loan under the FILO B facility not to exceed $5 million, and additional incremental commitments from the FILO B lenders to make additional loans in an aggregate amount not to exceed $5 million after Nov. 9, subject to conditions.

A portion of the proceeds was used to repay all outstanding debt under the company’s credit agreement dated Dec. 31, 2020 with JPMorgan Chase Bank, NA as administrative agent, along with accrued interest, expenses and fees, and for a loan repurchase of $5 million under the same credit agreement. Proceeds were also used to pay transaction costs related to the repurchase and for the execution and delivery of the new ABL agreement and related documents.

Any remaining proceeds, as well as the proceeds from future borrowings, will be used for working capital needs and other general corporate purposes.

The facilities are secured by a first priority lien on all present and after-acquired tangible and intangible assets of the company and its subsidiaries other than certain collateral that secures the term loan.

Wells Fargo Bank, NA is the administrative agent, the sole lead arranger and bookrunner, the FILO A lender, swingline lender and revolving lender.

Bank of America is also revolving lender on the new facility.

1903 Partners, LLC is the FILO B lender and 1903P Loan Agent, LLC is the FILO B documentation agent.

Tuesday Morning Corp. and TMI Holdings, Inc. are the guarantors of the amended term loan agreement.

Alter Domus (US) LLC is the administrative agent for the term loan.

Lenders on the term loan agreement are Tensile Capital Partners Master Fund, Osmium Capital, LP, Osmium Capital II, LP, Osmium Spartan, LP, Osmium Diamond, LP, TCP VI Special Situations LP, CEOF Holdings LP and Foxhill Opportunity Fund, LLP.

Tuesday Morning is a discount off-price retailer based in Dallas. The company filed bankruptcy on May 27, 2020 under Chapter 11 case number 20-31476 and emerged on Dec. 31.

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