Tupperware engages financial advisers, gives going-concern warning

By Sarah Lizee

Olympia, Wash., April 10 – Tupperware Brands Corp. has engaged financial advisers to help improve its capital structure and remediate its doubts regarding its ability to continue as a going concern, the company said in a press release issued Friday.

Tupperware said it is engaging in discussions with potential investors or financing partners for supplemental financing.

The company said it is also reviewing its real estate portfolio for property available for potential dispositions or sale-leaseback transactions, and is exploring right-sizing efforts, monetization of fixed assets, cash management, and marketing and channel optimization, to preserve or deliver additional liquidity.

Tupperware determined that a violation of its credit facility covenants is likely as a result of a delay in filing its annual report on form 10-K for the year ended Dec. 31, 2022, as well as cash constraints caused by higher interest costs and timing of re-engineering actions.

The company entered into the credit agreement on Nov. 30, 2021 and amended it on Aug. 1, 2022, Dec. 21, 2022, and Feb. 22, according to an 8-K filed with the Securities and Exchange Commission.

Effective with the third amendment, the credit agreement primarily included a secured revolver with maximum available borrowings of $220 million, a $400 million term loan and a newly issued $200 million term loan, all of which have a maturity date of July 31, 2025.

In connection with the third amendment, the lenders converted $200 million of borrowings under the revolver into a $200 million term loan and reduced the maximum amount of available borrowings under the revolver to $220 million.

The newly issued term loan bears interest at SOFR plus 635 basis points, 750 bps and 800 bps in 2023, 2024 and 2025, respectively.

The revolver and the other term loan bear interest at SOFR plus a premium depending upon the company’s leverage ratio, which could be as high as an additional 475 bps.

Tupperware entered into both the second and third amendments to address expected non-compliance with financial covenants, given that the company was forecasting that it would not meet its financial covenants absent modifications.

The company said that due to the challenging internal and external business economics, coupled with the increased levels and cost of borrowings under the credit facility, it currently forecasts that, if it is unable to obtain capital resources or further amendments to the credit agreement, it may not have adequate liquidity in the near term.

As a result, Tupperware has concluded there is substantial doubt about its ability to continue as a going concern.

On April 3, the New York Stock Exchange informed the company that it has six months from the form 10-K due date to regain compliance with the NYSE listing standards by filing the 10-K with the SEC.

If the company fails to file the 10-K within the six-month period, the NYSE may grant an extension of up to six additional months for the company to regain compliance, depending on the specific circumstances.

The NYSE may begin delisting proceedings at any time if it deems that circumstances warrant.

The company currently hopes to file its 10-K with the SEC within the next 30 days.

Tupperware Brands is a consumer products company based in Orlando, Fla.

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