Jones closes amend-and-extend on $650 million facility via J.P. Morgan

By Susanna Moon

Chicago, April 28 - Jones Group Inc. said it lowered fees and interest rates in line with market rates on its $650 million senior credit facility Thursday with J.P. Morgan Securities LLC and Citigroup Global Markets Inc. as lead arrangers.

Interest on the loans will be Libor plus 175 basis points to 225 bps, according to an 8-K filing with the Securities and Exchange Commission.

The maturity date was extended to April 28, 2016.

JPMorgan Chase Bank, NA is the administrative agent for the lenders, and JPMorgan Chase Bank, NA, Toronto Branch is the administrative agent for the Canadian lenders.

The agreement expands the credit facility's international commitment to allow for the inclusion of European borrowers that may draw under the credit facility, the company noted in a press release.

The credit facility is mainly used as backing for the issuance of trade letters of credit and other supply chain purposes but also may be used for working capital and general corporate purposes.

There is currently no cash borrowing under the existing facility.

Breakdown of changes

Specific changes to the credit agreement include the following:

• A split of the facility into a $350 million U.S. commitment, which may be drawn by the U.S. borrowers as revolving loans or letters of credit in U.S. dollars, and a $300 million international commitment, which may be drawn by the U.S. borrowers or by any Canadian or European borrowers as revolving loans or letters of credit in euros, sterling, Canadian dollars or U.S. dollars, with a cap of $350 million on all letters of credit regardless of currency;

• Reductions in the interest rate spreads and commitment fees payable under the facility;

• Addition of separate borrowing bases in each relevant European country, similar to the U.S. borrowing base;

• Changes in the U.S. borrowing base eligibility criteria for inventory in or in transit to Canada;

• An increase in the cap on swingline loans to $65 million from $60 million;

• Reductions in the various availability levels below which dominion periods are triggered and below which the borrowers must meet a minimum fixed-charge coverage ratio, make weekly borrowing base reports and pay for additional field exams and appraisals;

• An increase in the acquired debt basket to $100 million from $50 million, the addition of a new lien basket for financing secured by intellectual property, an increase in the capital lease basket to $100 million from $75 million, an increase in general liens to $100 million from $25 million, a lifting of limits on the general unsecured debt basket, and a lifting of limits on unsecured and secured debt incurred by non-U.S. subsidiaries that are not loan parties;

• Addition of a new investments basket subject to a minimum availability level and a fixed-charge coverage test, a reduction in the minimum availability level and the fixed-charge coverage ratio needed for permitted acquisitions and an increase in the basket for investments in subsidiaries that are not loan parties to $50 million from $30 million, plus $125 million for any potential future investments in GRI;

• Change in the general asset sales basket to 20% of consolidated total assets since May 13, 2009 from $10 million in any fiscal year; and

• Reductions in the various minimum availability levels and fixed-charge coverage ratios required to make restricted payments or to prepay Jones's bonds maturing in 2014.

"We are pleased with the overwhelming support of the financial institutions associated with the amendment process, as it allows us to take advantage of a healthier bank market to realize reduced rates, obtain more favorable and flexible terms and conditions, and extend the maturity date of the facility for an additional year," John T. McClain, chief financial officer, said in the release.

"Our businesses generate a significant amount of cash, and we believe that, combined with the $650 million of committed bank credit, provides us with the financial flexibility to pursue our strategic goals."

Jones Group is a New York-based designer, marketer and wholesaler of apparel, footwear, jeanswear, jewelry and handbags.

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