HanesBrands announced today that it has negotiated an amendment to its revolving loan facility credit agreement that reduces borrowing costs and extends the revolver’s maturity date.
The amendment, effective immediately, reduces the company’s revolving loan facility borrowing rate by 100 basis points, reduces its unused revolver fee by 15 basis points, and extends the revolver’s maturity initially to September 2016 and could eventually extend it to July 2017. Under the new terms, HanesBrands expects to save an annualized $2 million in revolver interest expense. In 2012, overall interest expense is expected to be $15 million lower than last year, resulting primarily from reduced long-term debt.
“Our banks have recognized our strengthened credit profile as a result of our operating performance and continued improvement of our balance sheet as we use free cash flow to deleverage and reduce debt,” said Hanes Chief Financial Officer Richard D. Moss. “We took advantage of our performance and improvement to reduce our borrowing costs.”
Under the terms of the amendment, Hanes’ revolving loan facility borrowing rate at its current leverage ratio is LIBOR plus 225 basis points, down from 325 basis points, and its unused revolver fee is 35 basis points, down from 50 basis points. The borrowing rate would continue to decrease if the company’s leverage ratio decreases. The revolver maturity has been extended to September 2016 with the provision that it will extend to July 2017 if the company redeems its 8 percent notes as planned next year.Hanes has committed to using free cash flow in 2012 and 2013 to significantly reduce long-term debt and leverage. As previously announced, Hanes redeemed $150 million of Floating Rate Senior Notes due 2014 on Thursday, July 12, and continues to expect to redeem the remaining $147 million of these notes by the end of 2012. In 2013, the company’s goal is to pay off its $500 million of 8 percent notes, which would reduce total bond debt to approximately $1 billion. That also would further reduce the revolver borrowing rate as a result of an improved leverage ratio and extend the revolver maturity until July 2017.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV