Five Below Inc. Enters into First Amendment to Credit Agreement
January 29, 2021 at 08:52 pm
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On January 27, 2021, Five Below Inc. entered into a First Amendment to Credit Agreement (the 'Amendment') among the Company, 1616 Holdings, Inc. (the 'Guarantor' and with the Borrower, collectively, the 'Loan Parties'), the lenders party thereto (the 'Lenders') and Wells Fargo Bank, National Association ('Wells') as agent for the Lenders (in such capacity, the “Agent”), which amended that certain Fifth Amended and Restated Credit Agreement, dated April 24, 2020 (the “Credit Agreement”) by and among the Loan Parties, the lenders party thereto and the Agent. Pursuant to the Amendment, the Company obtained commitments from the Lenders that would allow the Company at its election (subject only to satisfaction of certain customary conditions such as the absence of any Event of Default), to increase the amount of its senior secured asset-based revolving credit facility (the “Credit Facility”) by an aggregate principal amount up to $50,000,000 (the “Committed Increase”). The Amendment preserves the existing provisions of the Credit Agreement allowing for further increases to the total commitment under the Credit Facility, subject to certain conditions including obtaining commitments from one or more lenders (“Uncommitted Incremental Capacity”), provided that the total amount of the facility, as increased pursuant to a Committed Increase or Uncommitted Incremental Capacity, cannot exceed $375,000,000. The current amount of the Credit Facility is maintained at $225,000,000. Pursuant to the Amendment, availability under the Credit Facility will continue to be based upon quarterly (or monthly or weekly, in certain cases) borrowing base certifications valuing the Loan Parties’ eligible credit card receivables and inventory, as reduced by certain reserves in effect from time to time. The Amendment provides for the deferral of inventory appraisals and certain other diligence items, with reduced advance rates applicable during the period that such appraisals have not been delivered. The Amendment also reduced the pricing under the Credit Facility. Giving effect to the Amendment, outstanding borrowings under the Credit Facility would accrue interest at floating rates plus an applicable margin ranging from 1.25% to 1.75% for LIBOR loans and 0.25% to 0.75% for base rate loans, and letter of credit fees range from 1.25% to 1.75%., in each case based on the average availability under the Credit Facility. The Amendment makes a number of other revisions to the covenants in the Credit Agreement, including a revision to the minimum availability covenant to require availability of 12.5% during the diligence deferral period referenced above and 10.0% at all other times.
Five Below, Inc. is a specialty value retailer offering merchandise targeted at the tween and teen demographic. Its assortment of products, including select brands and licensed merchandise. It is engaged in offering a group of products, including leisure, fashion and home, and snack and seasonal. Leisure includes items, such as sporting goods, games, toys, tech, books, electronic accessories, arts and crafts, and party. Fashion and home include items, such as personal accessories, attitude t-shirts, beauty offerings, home goods and storage options. Snack and seasonal include items, such as seasonal goods, greeting cards, candy and other snacks, and beverages. It also offers its merchandise on the Internet, through its fivebelow.com e-commerce Website, offering home delivery and the option to buy online and pick up in store. It also sells its merchandise through on-demand third-party delivery services to enable its customers to shop online and receive convenient delivery.