Fossil amends credit agreement, lowers commitments, revises terms

By Tali Rackner

Norfolk, Va., March 10 – Fossil Group, Inc. entered into a second amendment to its amended and restated credit agreement on Friday, to lower revolving commitments and revise pricing, according to an 8-K filing with the Securities and Exchange Commission.

Wells Fargo Bank, NA is the administrative agent.

The amendment reduces the revolving credit commitment under the agreement to $850 million. It also removes the incremental term loan that was available under the credit agreement, extends the maturity date to March 17, 2019 and removes the company’s ability to make offers to the lenders to extend the maturity date of the term loan or of the revolving credit commitment.

The amendment also revises interest to Libor plus 350 basis points. If the term loan has not been repaid in full on or prior to Oct. 1, 2017, the applicable margin will automatically increase to Libor plus 375 bps. If the term loan has not been repaid in full on or prior to March 31, 2018, it will automatically increase to Libor plus 425 bps.

The commitment fee on the revolver was also changed to 50 bps.

Further, the maximum consolidated total leverage ratio covenant was changed to 3.25 times through July 1, to 3.5 times through Sept. 30, to 3.25 times through March 31, 2018, to 3.5 times through Sept. 29, 2018 and to 3.25 times thereafter.

The amendment amends the amortization schedule for the repayment of the term loan and requires the company to make monthly payments of the outstanding principal amount of the term loan on the last business day of each month commencing on April 30, 2018.

“On and after April 1, 2018, interest on the term loan that is calculated by reference to the base rate will be due and payable in arrears on the last business day of each calendar month, and interest on the term loan that is calculated by reference to the Libor rate will be due and payable on the last day of the applicable interest period; provided, that if such interest period extends for over one month, then interest will be due and payable at the end of each one month interval during such interest period,” the filing said.

Wells Fargo Securities, LLC, Bank of America Merrill Lynch and JPMorgan Chase Bank, NA acted as joint lead arrangers and bookrunners on the amended agreement. HSBC Bank USA, NA, Compass Bank and Fifth Third Bank acted as co-documentation agents, and Bank of America, NA and JPMorgan acted as co-syndication agents.

Fossil is a fashion accessories designer and marketer based in Richardson, Texas.

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