Tile Shop enters into $125 million five-year senior credit facility

By Tali Rackner

Norfolk, Va., June 4 – Tile Shop Holdings, Inc. and operating subsidiary Tile Shop, LLC entered into a $125 million senior credit facility on Tuesday via Fifth Third Bank, according to an 8-K filing with the Securities and Exchange Commission.

The facility is comprised of a $50 million five-year term loan and a $75 million revolving line of credit. The revolver has a $10 million sublimit for letters of credit and a $10 million sublimit for swingline loans.

Initial interest is adjusted Libor plus 175 basis points. The margin over Libor ranges from 150 bps to 200 bps, based on leverage.

Maturity is June 2, 2020.

Certain financial covenants require Tile Shop to maintain a maximum consolidated fixed-charge coverage ratio of 2 times and a consolidated total rent-adjusted leverage ratio of 4.75 times from Sept. 30 through Dec. 31, 2015; 4.5 times from Jan. 1, 2016 through June 30, 2016; 4.25 times from July 1, 2016 through Dec. 31, 2016; 4 times from Jan. 1, 2017 through June 30, 2017; 3.75 times from July 1, 2017 through Dec. 31, 2017; and 3.5 times thereafter.

The new facility replaces the current senior secured credit facility dated Oct. 3, 2012.

Fifth Third Bank acted as the administrative agent, swingline lender, letter-of-credit issuer, lead arranger and bookrunner. Bank of America, NA acted as the syndication agent.

Tile Shop is a Plymouth, Minn.-based specialty retailer of manufactured and natural stone tiles, setting and maintenance materials.

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