Macy’s to ink new ABL revolver after repaying existing revolver

By Rebecca Melvin

New York, May 26 – Macy’s Inc. subsidiaries Macy’s Inventory Funding LLC and Macy’s Inventory Holdings LLC will enter into an asset-based credit agreement with Bank of America, NA as administrative agent and collateral agent, according to an 8-K filing with the Securities and Exchange Commission.

The ABL credit facility will provide a revolving credit facility, including a swingline sub-facility and a letter of credit sub-facility, and a bridge revolver of up to $300 million.

Separately the company plans to use proceeds from a new note offering together with cash on hand to repay all amounts outstanding under its existing revolver, according to a company news release on Tuesday.

The company is issuing senior notes due 2025 secured on a first-priority basis by a first mortgage/deed of trust in real property of subsidiaries of Macy’s Propco Holdings LLC, a newly created subsidiary.

The company’s revolving credit commitments going forward will be about $3 billion.

In addition, the ABL revolver is to have an accordion feature that will enable the facility to be increased by up to an additional $750 million. Macy’s Inventory Holdings will guarantee the obligations under the facility.

The ABL revolver will mature on May 9, 2024 and the bridge facility will mature Dec. 30.

Borrowings under the facility are expected to be subject to an interest rate of adjusted Libor plus a margin of 225 basis points to 300 bps. Additionally, the ABL facility is expected to contain customary borrowing conditions including a borrowing base equal to the sum of 80% of the net orderly liquidation percentage of eligible inventory, minus customary reserves.

Concurrently with closing the ABL facility, the borrower will purchase the existing inventory of Macy’s newly created operating company, Macy’s Retail Holdings Inc., and some operating subsidiaries that own and operate retail or department stores or sell merchandise online, and it will assume the liabilities of the outstanding trade payables owed to vendors. After closing the ABL credit facility, the operating companies will acquire all inventory from vendors in the ordinary course of business as the agent of and on behalf of the ABL borrower.

The ABL credit facility is expected to contain customary covenants that provide for, among other things, limitations on debt, liens, fundamental changes, restricted payments, cash hoarding, and prepayment of some debt. It is also expected to contain representations and warranties and events of default typical for credit agreements of this type.

The company noted that it may not be able to syndicate and close the ABL facility on acceptable terms or at all.

The retailer is based in New York.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.