HanesBrands loan amendment permits new senior and unsecured debt

By Sara Rosenberg

New York, Feb. 18 - HanesBrands' revolving credit facility amendment allows for the incurrence of additional senior debt and additional unsecured debt as long as financial covenant compliance is maintained, according to an 8-K filed with the Securities and Exchange Commission on Friday.

The amendment loosened covenants, which include a leverage ratio and an interest coverage ratio.

The leverage ratio was increased to 4.50 to 1 from 4.00 to 1 for each fiscal quarter ending between Oct. 16 and April 15, 2011, to 4.50 to 1 from 3.75 to 1 for each fiscal quarter ending between April 16, 2011 and Oct. 15, 2012, to 4.25 to 1 from 3.75 to 1 for each fiscal quarter ending between Oct. 16, 2012 and Oct. 15, 2013, and to 4.00 to 1 from 3.75 to 1 for each fiscal quarter ending between Oct. 16, 2013 and Oct. 15, 2014. Thereafter, the ratio is 3.75 to 1.

The interest coverage ratio was decreased to 3:00 to 1 from 3.25 to 1 for each fiscal quarter ending between July 16, 2011 and Oct. 15, 2012, and thereafter it will be 3.25 to 1.

And, the company is required senior secured leverage ratio of 2.50 to 1 for each fiscal quarter ending between Oct. 16, 2010 and Oct. 15, 2012, 2.25 to 1 for each fiscal quarter ending between Oct. 16, 2012 and Oct. 15, 2014, and 2.00 to 1 for each fiscal quarter ending on and after Oct. 16, 2014.

Furthermore, the amendment revised the general investment basket, the restricted payment basket and the capital expenditure basket.

As was previously reported, the amendment also extended the maturity of the revolver by two years to December 2015 and lowered pricing to Libor plus 325 basis points from Libor plus 450 bps.

In fact, the entire pricing grid saw this 125 bps reduction. As a result, the spread can now range from Libor plus 275 bps to Libor plus 350 bps, based on leverage.

Additionally, under the amendment, the commitment fee was reduced to 50 bps from 75 bps.

JPMorgan Chase Bank is the administrative agent on the deal.

The amendment was completed on Feb. 17.

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

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