Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Credit Agreement
On October 30, 2020, Chico's FAS, Inc. (the “Company”) and certain material domestic subsidiaries entered into an Amendment No. 1 (the "Amendment") to that certain Credit Agreement (the "Credit Agreement"), dated as of August 2, 2018, by and among the Company, certain material domestic subsidiaries as co-borrowers and guarantors, Wells Fargo Bank, National Association, as Agent, letter of credit issuer and swing line lender, and certain lenders party thereto.
The Amendment, among other things, (i) increases the asset-based senior secured revolving loan (the "ABL") from up to $200 million to up to $285 million, (ii) extends the maturity from August 2, 2023 to October 30, 2025, (iii) amends the ABL borrowing base and ties it to accounts receivable, the level of inventory and the value of certain real estate, (iv) increases the margin on LIBO rate loans drawn under the ABL from 1.25% to 2.25% (subject to an increase to 2.50% based upon average quarterly excess availability under the ABL), with a LIBO rate floor of 0.75%, (v) increases the commitment fee on the unused portion of the commitments under the ABL from 0.20% to 0.375%, and (vi) amends certain covenants, including replacing the existing fixed charge coverage ratio covenant with a minimum excess availability covenant which requires excess availability to be less than the greater of 10% of the loan cap and $29.25 million.
The Amendment also provides for a $15 million first-in last-out loan (the "FILO"). The interest rate applicable to FILO loans is equal to, at the Company's option, either a base rate, determined by reference to the federal funds rate, or a LIBO rate, plus in each case a margin of 4.5%, with a LIBO rate floor of 0.75%. The FILO includes a prepayment penalty equal to 1.0% in the first year, 0.5% in the second year and none thereafter. The FILO can only be prepaid if there are no outstanding borrowings under the ABL.
The Company's obligations under the Credit Agreement are guaranteed by the guarantors and secured by a first priority lien on certain assets of the Company and certain material domestic subsidiaries, including inventory, accounts receivable, cash deposits, certain insurance proceeds, real estate, fixtures and certain intellectual property.
As of immediately following entry into the Amendment, there were $134 million in ABL loans and $15 million of FILO loans outstanding under the Credit Agreement.
The foregoing is only a summary of certain material terms of the Amendment, does not purport to be complete, and is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 10.1 hereto, and is incorporated by reference herein.