FTD credit agreement amendment waives defaults, adjusts covenants

By Wendy Van Sickle

Columbus, Ohio, June 1 – FTD Cos. Inc. entered an amendment its credit agreement with Bank of America, NA under which the lenders agreed to waive some defaults and the borrower will be subject to some restrictions and amended covenants, according to an 8-K filed with the Securities and Exchange Commission.

Specifically, the lenders agreed to waive defaults caused by the inclusion of a “going concern” explanatory paragraph in the audit opinion for the year ended Dec. 31, 2017, and by the company’s breach of the consolidated net leverage ratio for the quarter ended March 3.

Additionally, the borrower’s usage under the revolving credit facility portion of the credit agreement will be restricted to $150 million from May 31 through Sept. 30; $175 million from Oct. 1 through Dec. 31; and $150 million from Jan. 1, 2019 through the Sept. 19, 2019 maturity date.

The consolidated net leverage ratio was increased to 6.25 times with periodic step-downs to 2.5 times for the quarter ending June 30, 2019, after which it will rise to 3.5 times for the final quarter. Prior to the amendment, the ratio was 3.25 times through maturity.

The fixed charge coverage ratio was decreased to 0.7 times with periodic step-ups to 1.75 times for the final quarter. Previously, the ratio was 1.25 times through maturity.

Beginning Oct. 1, the company will be required to pay a quarterly fee to the lenders in an amount equal to the actual daily amount of the unfunded commitments and outstanding loans times 0.125% a year until Dec. 31 and 0.25% per year from Jan. 1, 2019 and onwards. From Jan. 1, 2019 through the maturity date, the fee will be calculated based on the lesser of $150 million and the actual daily amount of the unfunded commitments and outstanding loans.

Also, without the prior written consent of the required lenders, FTD will not be permitted to acquire all or substantially all of the assets of any person, all or substantially all of a division or line of business of any person or more than 50% of the capital stock of any person.

Beginning June 30, the company will be subject to some restrictions on capital expenditures.

FTD is a Downers Grove, Ill.-based floral and gifting company.

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