Helen of Troy Limited
02/20/2024 | Press release | Distributed by Public on 02/20/2024 15:15
Material Agreement - Form 8-K
Item 1.01 Entry into a Material Definitive Agreement.
Credit Agreement and Guaranty
On February 15, 2024, Helen of Troy Limited (the "Company") and Helen of Troy Texas Corporation, a subsidiary of the Company and the borrower ("Borrower"), entered into that certain Credit Agreement (the "Credit Agreement") with Bank of America, N.A., as administrative agent, and the other lenders party thereto. All obligations under the Credit Agreement are unconditionally guaranteed by the Company and certain of the Company's subsidiaries pursuant to that certain Guaranty (the "Guaranty") in favor of Bank of America, N.A. and the other lenders. The Credit Agreement and Guaranty replaced the Company's and Borrower's prior credit agreement with Bank of America, N.A., as administrative agent, and other lenders that provided for an unsecured revolving commitment of $1.25 billion and an accordion feature for term loans of up to $300.0 million, which term loans had a current outstanding principal amount of approximately $242.2 million at closing and were scheduled to mature on March 13, 2025 and the Company's and certain of the Company's subsidiaries prior guaranty in favor of Bank of America, N.A. and the other lenders party thereto (as amended, collectively referred to as the "Prior Credit Agreement").
The Credit Agreement provides for aggregate commitments of $1.50 billion, which commitments are available through the following facilities:
Revolving Facility- A $1.0 billion revolving credit facility (the "Revolving Facility"), which includes a $50 million sublimit for the issuance of letters of credit.
Term Facilities- A $250.0 million term loan facility, which was drawn on the closing date of the Credit Agreement (the "Initial Term Loan") and a committed $250 million delayed draw term loan facility (the "DDTL Term Loans" and collectively with the Initial Term Loan, the "Term Facility"), which may be borrowed in multiple drawdowns until August 15, 2025.
The maturity date of the Revolving Facility and the Term Facility is February 15, 2029. The Initial Term Loan and any DDTL Term Loans will be subject to quarterly amortization based on the following amortization percentage of the original principal balance of the Initial Term Loan and any DDTL Term Loans:
| Fiscal Quarter Ending | Amortization Percentage |
| May 30, 2024 - February 28, 2025 | 0.625% |
| May 30, 2025 - February 28, 2026 | 0.9375% |
| May 30, 2026 and thereafter | 1.25% |
We may prepay the Initial Term Loan and any DDTL Term Loans, in whole or in part, at any time without premium or penalty. All principal and interest under the Revolving Facility and the Term Facility is due and payable at the maturity date.
The Credit Agreement also includes an accordion feature, which can be used to increase the Revolving Facility and Term Facility commitments under the Credit Agreement. The accordion permits the Company to request to increase these commitments by an aggregate amount of up to (1) the Fixed Incremental Amount (as described below) plus (2) unlimited additional amounts so long as (on a pro forma basis after giving effect to the incurrence of the borrowing under the accordion and any acquisition or investment consummated in connection therewith) the Leverage Ratio (as defined in the Credit Agreement) shall not exceed 3.25:1. The Fixed Incremental Amount is equal to, as of any date of determination, the sum of (1) the greater of (a) $300 million and (b) an amount equal to 100% of the Company's Consolidated EBITDA (as defined in the Credit Agreement) for the period of the four consecutive fiscal quarters most recently ended for which financial statements have been delivered under the Credit Agreement and (2) the aggregate principal amount of certain voluntary loan prepayments and/or permanent reductions of commitments minus(3) the aggregate principal amount of all Incremental Facilities (as defined in the
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Credit Agreement) incurred in reliance on the Fixed Incremental Amount. The Company's exercise of the accordion is subject to certain conditions being met, including lender approval. Any increase to Revolving Facility commitments must be made on terms identical to the revolving loans under the Credit Agreement. Generally, any increase to the Term Facility commitments under the accordion must be made on terms substantially consistent with the Initial Term Loan. Any such increase must also have a maturity date of no earlier than February 15, 2029.
Borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR, plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement) of 0% to 1.125% for Base Rate Loans (as defined in the Credit Agreement) and 1.0% to 2.125% for Term SOFR Loans (as defined in the Credit Agreement).
The proceeds from the Initial Term Loan under the Credit Agreement (1) were used to refinance all debt outstanding under the Prior Credit Agreement, and (2) can be used for working capital and other general corporate purposes, including funding permitted acquisitions.
The Credit Agreement requires the maintenance of certain financial covenants, including a maximum Leverage Ratio and a minimum Interest Coverage Ratio (each, as defined in the Credit Agreement), and includes customary representations and warranties, and covenants, including, among other things, covenants restricting or limiting the Company and its subsidiaries, except under certain conditions set forth therein, from (1) incurring liens on any of their respective properties, (2) making certain types of investments, (3) incurring additional indebtedness, and (4) assigning or transferring certain licenses. Certain of the representations and warranties, and covenants in the Credit Agreement were revised from the Prior Credit Agreement to include or modify certain baskets, exceptions and other customary provisions.
The Credit Agreement contains customary events of default, including, among others, non-payment by any borrower, non-compliance with certain covenants by the Company or its subsidiaries party to such agreement, the bankruptcy filing of the Company or its subsidiaries, and a default by the Company or its subsidiaries under certain other agreements related to indebtedness of the Company or its subsidiaries. Upon an event of default under the Credit Agreement, the requisite lenders, or Bank of America with the approval of the requisite lenders, may among other things accelerate the maturity of any amounts outstanding under such agreement and terminate any commitments and obligations of the lenders thereunder.
The foregoing descriptions of the Credit Agreement and the Guaranty do not purport to be a complete description of all of the parties' rights and obligations under such agreements and are qualified in their entirety by reference to the Credit Agreement and Guaranty, which are filed as exhibits with this Current Report on Form 8-K.