DLTH Duluth Holdings Inc

Item 1.01Entry into a Material Definitive Agreement 

On April 30, 2020, Duluth Holdings Inc. (the “Company”) entered into an amendment (the “Amendment”) to its existing Credit Agreement (the “Credit Agreement”), by and among the Company, the lenders from time to time a party thereto (the “Lenders”) and BMO Harris Bank N.A., as a Lender and as administrative agent for the Lenders, in order to, among other items, provide for an additional delayed draw term loan in an aggregate principal amount of up to $20.5 million (the “Delayed Draw Term B Loan”). The amended Credit Facility currently provides for borrowing availability of up to $150.5 million in aggregate principal amount, which consists of: (i) up to $80 million in revolving credit and the associated swing line (the “Revolver”); (ii) up to $50 million in a delayed draw term loan (“Delayed Draw Term A Loan”); and (iii) up to $20.5 million under the Delayed Draw Term B Loan.

Under the Amendment, the interest rate applicable to the Revolver and Delayed Draw Term A Loan will be a floating rate equal to: (i) the base rate plus a margin of 125 to 200 basis points (“bps”), based upon the Company’s rent adjusted leverage ratio, or (ii) a fixed rate for a one-, two-, three- or six-month interest period equal to LIBOR for such interest period plus a margin of 225 to 300 bps, based upon the Company’s rent adjusted leverage ratio. The interest rate applicable to the Delayed Draw Term B Loan will be a floating rate equal to: (i) the base rate plus a margin of 175 to 250 bps, based upon the Company’s rent adjusted leverage ratio, or (ii) a fixed rate for the term of the Delayed Draw Term B Loan equal to LIBOR for such interest period plus a margin of 275 to 350 bps, based upon the Company’s rent adjusted leverage ratio.  Under the Amendment, the accordion feature that gives the Company the right to establish one or more term loan commitments, revolver commitments or a combination thereof has been reduced by the amount of the Delayed Draw Term Loan B from an aggregate amount of up to $50 million to an aggregate amount of up to $29.5 million. In addition, the calculation of the rent-adjusted leverage ratio has been revised to include outstanding principal amounts of Delayed Draw Term Loans and the minimum rent-adjusted leverage ratio covenants have been revised to 4.75 to 1.00 for the quarters ending May 3, 2020 and August 2, 2020, 4.50 to 1.00 for the quarter ending November 1, 2020, 4.25 to 1.00 for the quarter ending January 31, 2021 and 3.50 to 1.00 commencing with the quarter ending May 2, 2021 and each fiscal quarter thereafter.  The Delayed Draw Term B Loan will mature on April 29, 2021. The proceeds of the Delayed Draw Term B Loan will be used to refinance existing indebtedness, finance working capital and capital expenditures, and for other general corporate purposes.