Abercrombie amends loan terms related to closing of Gilly Hicks stores

By Susanna Moon

Chicago, Nov. 8 - Abercrombie & Fitch Co. said it amended its credit and term loan agreements in connection with the decision to close the Gilly Hicks stores.

The amendments allow the company to exclude from its calculation of the minimum coverage and maximum leverage ratios up to $60 million of cash charges associated with the Gilly Hicks restructuring, according to a company press release.

In addition, the required minimum coverage ratio will be temporarily reduced through the second quarter of the 2015 fiscal year, the company noted.

The company amended its credit agreement on Nov. 4 with PNC Bank, NA as co-lead arranger and global agent, according to an 8-K filing with the Securities and Exchange Commission.

The amendments include the following provisions:

• The fee was set to 30 basis points, and ranges from 12.5 bps to 30 bps based on leverage.

• The margin on fixed-rate loans was set to 145 bps, with a spread of 65 bps to 145 bps based on leverage.

• The calculation of consolidated EBITDAR was amended to permit a one-time add back of up to $60 million for cash payments and expenses relating to the restructuring of the Gilly Hicks business and brand;

• The negative covenant restricting investments and guarantees of foreign subsidiaries was amended to increase the cap to 35% from 30% of consolidated tangible assets; and

• The required minimum level of the coverage ratio was reduced to 1.6 times for the period ending Feb. 1, 2014 and each of the periods during the fiscal year ending Jan. 31, 2015, with the level gradually rising to 1.75 times for the periods ending Oct. 31, 2015 and thereafter.

The amendment fee for the revolver was $350,000, representing 0.1% of each lender's total revolving loan commitment.

As of closing, there were no borrowings outstanding under the credit agreement.

Term loan changes

The term credit facility was amended as follows:

• Interest on the term loans was set at Libor plus 200 bps, and the spread ranges from 100 bps to 200 bps based on leverage.

• The calculation of consolidated EBITDAR was amended to permit a one-time add back of up to $60 million for cash payments and expenses relating to the restructuring of the Gilly Hicks business and brand;

• The negative covenant restricting investments and guarantees of foreign subsidiaries was amended to increase the cap to 35% from 30% of consolidated tangible assets; and

• The required minimum level of the coverage ratio was reduced to 1.6 times for the period ending Feb. 1, 2014 and each of the periods during the fiscal year ending Jan. 31, 2015, with the level gradually rising to 1.75 times for the periods ending Oct. 31, 2015 and thereafter.

The amendment fee for the term loan was $138,750, representing 0.1% of each lender's total revolving loan commitment.

At closing, there was $138.75 million of borrowings under the term loan agreement, with standby letters of credit totaling about $1.8 million outstanding.

Abercrombie & Fitch is a clothing retailer based in New Albany, Ohio.

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