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Item 1.01
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Entry into a Material Definitive Agreement.
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Third Amendment and Commitment Increase to Amended and Restated Credit Agreement
On March 13, 2020, 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 Third Amendment and Commitment Increase (the “Amendment”) to Amended and Restated Credit Agreement (as amended, 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.
The Amendment extended the maturity of the commitment under the Credit Agreement from December 7, 2021 to March 13, 2025. Further, the Amendment increased the unsecured revolving commitment from $1.0 billion to $1.25 billion, subject to the terms and limitations described below. The Amendment also increased the letter of credit sublimit under the Credit Agreement from $50.0 million to $75.0 million. The accordion in the Credit Agreement was also amended to include the ability to use the accordion for term loan commitments, in addition to revolving loan commitments. The amount of the accordion was also increased from $200 million to $300 million. The accordion permits the Borrower to request to increase its borrowing capacity, not to exceed the $300.0 million commitment in the aggregate, provided certain conditions are met, including lender approval. Any increase to term loan commitments and revolving loan commitments must be made on terms identical to the revolving loans under the Credit Agreement and must have a maturity date of no earlier than March 13, 2025.
The Eurodollar Rate (as defined in the Credit Agreement), the Base Rate (as defined in the Credit Agreement) and loan commitment fees under the Credit Agreement each was amended. As amended by the Amendment, borrowings under the Credit Agreement accrue interest at a Base Rate or Eurodollar Rate plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement). As amended by the Amendment, the Company will incur loan commitment fees under the Credit Agreement at an annual rate on the unused balance of the Credit Agreement based on the Net Leverage Ratio. The Amendment amended the pricing grid for the Eurodollar and Base Rate margins and loan commitment fees under the Credit Agreement. Prior to the Amendment, the pricing grid for the Eurodollar Rate and Base Rate margins and loan commitment fees under the Credit Agreement was as follows:
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Pricing Level
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Leverage Ratio
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Commitment Fee
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Eurodollar Rate for Loans and Letters of Credit
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Base Rate for Loans
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I
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Less than 1.50 to 1.00
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0.150%
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1.000%
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0.000%
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II
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Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00
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0.200%
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1.250 %
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0.250%
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III
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Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00
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0.250%
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1.500%
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0.500%
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IV
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Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00
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0.300%
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1.750%
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0.750%
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V
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Greater than or equal to 3.00 to 1.00
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0.350%
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2.000%
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1.000%
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As amended by the Amendment, the new pricing grid for the Eurodollar and Base Rate margins and loan commitment fees under the Credit Agreement is as follows:
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Pricing Level
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Net Leverage Ratio
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Commitment Fee
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Eurodollar Rate for Loans and Letters of Credit
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Base Rate for Loans
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I
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Less than 1.50 to 1.00
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0.150%
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1.000%
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0.000%
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II
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Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00
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0.200%
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1.125%
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0.125%
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III
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Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00
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0.250%
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1.375%
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0.375%
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IV
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Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00
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0.300%
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1.625%
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0.625%
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V
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Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00
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0.350%
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1.875%
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0.875%
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VI
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Greater than or equal to 3.50 to 1.00
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0.400%
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2.000%
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1.000%
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The Credit Agreement requires the maintenance of certain financial covenants, including a maximum Leverage Ratio (as defined in the Credit Agreement) and a minimum Interest Coverage Ratio (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 amended by the Amendment to include or modify certain baskets, exceptions and other customary provisions.
The Credit Agreement contains customary events of default, including, among other things, 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, Bank of America 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 description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, which is filed with this Current Report on Form 8-K.