RTW RTW Retailwinds Inc

Item 1.01 Entry into a Material Definitive Agreement.

On June 3, 2020, RTW Retailwinds, Inc. and its wholly-owned direct and indirect subsidiaries, including Lerner New York, Inc., Lernco, Inc., Lerner New York Outlet, LLC, Lerner New York FTF, LLC, Lerner New York Holding, Inc., New York & Company Stores, Inc., Lerner New York GC, LLC and FTF GC, LLC entered into Amendment No. 2 (“Amendment No. 2”) to Fourth Amended and Restated Loan and Security Agreement and Joinder with Wells Fargo Bank, National Association, as administrative agent and lender (as amended by Amendment No.2, the “Loan Agreement”). The obligations under the Loan Agreement are guaranteed by RTW Retailwinds, Inc. (the “Company”) and certain of its subsidiaries. All capitalized terms used herein without definition have the meanings ascribed to such terms in the Loan Agreement.

The provisions of the Loan Agreement amended by Amendment No. 2 include, among other things: (i) reduction to the sub-facility for issuance of letters of credit (see below); (ii) increased interest rates applicable to Revolving Loans (see below); (iii) a current repayment of $20 million of amounts outstanding under the Loan Agreement; (iv) full repayment of the amounts outstanding under the Loan Agreement by August 15, 2020; (v) starting June 13, 2020, the sweep of cash in excess of $40 million to pay down amounts outstanding under the Loan Agreement; (vi) revised reporting requirements; (vii) reduction in advance rates used for the Borrowing Base calculation; and (viii) forbearance until June 30, 2020 of certain specified potential defaults.

The maximum revolving credit facility commitment has changed, now providing the Company with a $75 million revolving credit facility (which includes a sub-facility for issuance of letters of credit up to $10 million). The Company no longer has a fully committed $25 million accordion option. Borrowing availability under the Company’s revolving credit facility is still determined by a monthly borrowing base calculation based on applying specified advance rates against inventory and certain other eligible assets which advance rates have been reduced from 95% to 90%. Under the Loan Agreement, the Company continues to be subject to a Minimum Excess Availability covenant equal to the greater of (i) 10% of the revolving credit facility commitment and (ii) $7.5 million.

Under the terms of the Loan Agreement, the interest rates applicable to Revolving Loans have increased. At the Company’s option, Revolving Loans now bear interest at either (i) a floating rate equal to the LIBOR plus a margin of 2.50% per year for LIBOR Rate Loans or (ii) a floating rate equal to the Base Rate plus a margin of 1.50% per year for Base Rate Loans. The fees the Company pays to the Lenders under the revolving credit facility and the monthly fee on outstanding commercial letters of credit and on standby letters of credit, plus a monthly fee on a proportion of the unused commitments under the revolving credit facility, remain unchanged.

The foregoing summary of the amendments to the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of Amendment No. 2, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.