Zale Corporation (NYSE: ZLC) today announced that it has secured a new $665 million credit facility, which includes an amended and extended $650 million Revolving Credit Facility and a new $15 million First-In, Last-Out (FILO) Credit Facility. The company also announced that it utilized increased availability from these facilities to fund a prepayment of $60.5 million on its Senior Secured Term Loan. In addition, Zale amended and extended its Senior Secured Term Loan with Golden Gate Capital for the remaining $80 million.
Overview of the Amended and Extended Revolving Credit Facility
- Facility size of $650 million
- Matures in five years, an increase of about three years from the prior agreement
- Priced at LIBOR plus 175 to 225 basis points based on the company’s average availability, an improvement of 175 basis points from the prior agreement
- Enhanced borrowing capacity by increasing the inventory collateral base by 2.5 percent to 90 percent
Overview of New FILO Credit Facility
- Facility size of $15 million
- Matures in five years
- Priced at LIBOR plus 350 to 400 basis points based on the company’s average availability
- Further enhanced borrowing capacity by increasing inventory collateral base up to an additional 2.5 percent
Overview of Amended and Extended Senior Secured Term Loan
- Utilized increased availability from the $665 million credit facility to fund a prepayment of $60.5 million on the term loan
- Amended and extended the Senior Secured Term Loan agreement for remaining $80 million
- Matures in five years, an increase of about two years from prior agreement
- Fixed interest of 11 percent per annum, payable quarterly in cash, a reduction from 15 percent per annum in the prior agreement
- Eliminated store contribution covenants and improved minimum liquidity requirement yielding approximately $50 million of additional availability
- Non-callable in year one, optional redemption with call premium of 4 percent in year two, 3 percent in year three and 2 percent in year four
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