Fossil obtains $750 million revolving loans, $250 million term loans

By Marisa Wong

Madison, Wis., May 20 - Fossil, Inc. entered into a credit agreement on May 17 for $750 million of revolving credit loans and $250 million of term loans, according to an 8-K filed Monday with the Securities and Exchange Commission.

Wells Fargo Bank, NA is the administrative agent, swingline lender and issuing lender under the credit agreement; Bank of America, NA and JPMorgan Chase Bank, NA are syndication agents; HSBC Bank USA, NA and Fifth Third Bank are documentation agents; and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Inc. and J.P. Morgan Securities LLC are joint lead arrangers and bookrunners.

The credit agreement expires on May 17, 2018 and replaces Fossil's credit agreement dated Dec. 17, 2010 that was set to mature on Dec. 17, 2014.

As of March 31, the company had $140 million of revolving loans outstanding under the old agreement. The prior facility, which provided for up to $300 million of revolving loans, was terminated on May 17.

The new revolver has a $20 million sublimit for swingline loans and a $10 million sublimit for letters of credit.

The facility is guaranteed by all direct and indirect material domestic subsidiaries of the company and is secured by 65% of the total outstanding voting capital stock and 100% of the non-voting capital stock of foreign subsidiaries Fossil Europe BV, Fossil (East) Ltd. and Swiss Technology Holding GmbH.

Interest is equal to Libor plus 125 basis points to 200 bps, depending on the company's consolidated leverage ratio.

The commitment fee, also based on the consolidated leverage ratio, ranges from 20 bps to 35 bps.

The facility contains financial covenants requiring the company to maintain

• A consolidated total leverage ratio no greater than 2.5 to 1;

• A consolidated interest coverage ratio no less than 3.5 to 1; and

• Maximum capital expenditures not in excess of (a) $200 million from closing through the fiscal year ending 2013 and during each of fiscal years 2014 and 2015 and (b) $250 million during each fiscal year after that.

Loans may be prepaid in whole or in part in minimum principal amounts of $5 million or increments of $1 million in excess of that for Libor loans under the revolver, $5 million or increments of $1 million in excess of that for term loans and $100,000 or increments of $100,000 in excess of that for swingline loans.

Loans must be repaid with cash proceeds from specified asset sales or insurance and condemnation events.

In addition, the company may permanently reduce the revolving credit commitment at any time without premium or penalty by a minimum principal amount of $3 million or increments of $1 million in excess of that.

In addition to repaying borrowing under the prior credit facility, proceeds from the credit agreement may be used to finance the acquisition of capital assets, for ongoing working capital, for other general corporate purposes and to repurchase capital stock.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.