Item 1.01. Entry Into a Material Definitive Agreement; Item 2.03 Creation of a
Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
On May 19, 2016, PVH Corp. (the "Company") entered into an amendment (the
"Amendment") to its existing senior secured credit facility that it had entered
into on March 21, 2014 (the "Old Credit Facility" and, as amended by the
Amendment, the "Amended Credit Facility").
Among other things, the Amendment provides for an additional approximately
$582,000,000 principal amount of tranche A term loans, the repayment of all
outstanding tranche B term loans and the termination of the tranche B term loan
facility. In addition, the maturities of the tranche A term loans and the
revolving loan facilities are extended under the Amendment from February 13,
2019 to May 19, 2021.
On May 19, 2016 (the "Amendment Date"), the Company borrowed the additional
approximately $582,000,000 principal amount of tranche A term loans made
available pursuant to the Amendment and the Amended Credit Facility and used the
proceeds of such borrowing, along with cash on hand, to repay the outstanding
tranche B term loans borrowed under the Old Credit Facility.
The following is a description of the material terms of the Amended Credit
The Amended Credit Facility consists of a $2,347,380,000 U.S. dollar-denominated
term loan A facility (the "TLA Facility") and senior secured revolving credit
facilities consisting of (a) a $475,000,000 U.S. dollar-denominated revolving
credit facility (the "U.S. Revolving Credit Facility"), (b) a $25,000,000 U.S.
dollar-denominated revolving credit facility available in U.S. dollars or
Canadian dollars (the "Canadian Revolving Credit Facility") and (c) a
€185,850,000 euro-denominated revolving credit facility available in euro,
pounds sterling, Japanese yen and Swiss francs (the "European Revolving Credit
Facility", and together with the U.S. Revolving Credit Facility and the Canadian
Revolving Credit Facility, the "Revolving Credit Facilities"). The Company is
the borrower under the TLA Facility, the U.S. Revolving Credit Facility and the
Canadian Revolving Credit Facility. PVH B.V., a wholly owned subsidiary of the
Company (the "European Borrower"), is the borrower under the European Revolving
The Company has fully drawn the TLA Facility. The Revolving Credit Facilities
include amounts available for letters of credit. A portion of each of the U.S.
Revolving Credit Facility and Canadian Revolving Credit Facility is also
available for the making of swingline loans. The issuance of such letters of
credit and the making of any swingline loan reduces the amount available under
the applicable Revolving Credit Facility. So long as certain conditions are
satisfied, the Company may add one or more term loan facilities or increase the
commitments under the Revolving Credit Facilities by an aggregate amount not to
exceed the sum of (1) the sum of (x) $1,350,000,000 plus (y) the aggregate
amount of all voluntary prepayments of loans under the TLA Facility and the
Revolving Credit Facilities (to the extent, in the case of voluntary prepayments
of loans under the Revolving Credit Facilities, there is an equivalent permanent
reduction of the revolving commitments) plus (z) an amount equal to the
aggregate revolving commitments of any defaulting lender (to the extent the
commitments with respect thereto have been terminated) and (2) an additional
unlimited amount as long as the ratio of the Company's senior secured net debt
to consolidated adjusted EBITDA (in each case calculated as set forth in the
documentation relating to the Amended Credit Facility) would not exceed
3.00:1.00 after giving pro forma effect to the incurrence of such increase. The
lenders under the Amended Credit Facility are not required to provide
commitments with respect to such additional facilities or increased commitments.
Obligations of the Company under the Amended Credit Facility are guaranteed by
substantially all of the Company's existing and future direct and indirect
United States subsidiaries, with certain exceptions. Obligations of the
European Borrower under the Amended Credit Facility are guaranteed by the
Company, substantially all of its existing and future direct and indirect United
States subsidiaries (with certain exceptions) and Tommy Hilfiger Europe B.V., a
wholly owned subsidiary of the Company. The Company and its domestic subsidiary
guarantors have pledged certain of their assets as security for the obligations
under the Amended Credit Facility.
The TLA Facility and the Revolving Credit Facilities will mature on May 19,
2021. The terms of the TLA Facility require the Company to repay quarterly
amounts outstanding under such facility, commencing with the quarter ending June
30, 2016. Such amounts will equal 5.00% per annum of the principal amount
outstanding on the Amendment Date for the first eight calendar quarters
following the Amendment Date, 7.50% per annum of the principal amount for the
four quarters thereafter and 10.00% per annum of the principal amount for the
remaining quarters, in each case paid in equal installments and in each case
subject to certain customary adjustments, with the balance due on the maturity
date of the TLA Facility.
The outstanding borrowings under the Amended Credit Facility are prepayable at
any time without penalty (other than customary breakage costs). The terms of
the Amended Credit Facility require the Company to repay certain amounts
outstanding thereunder with (a) net cash proceeds of the incurrence of certain
indebtedness, (b) net cash proceeds of certain asset sales or other dispositions
(including as a result of casualty or condemnation) that exceed certain
thresholds, to the extent such proceeds are not reinvested or committed to be
reinvested in the business in accordance with customary reinvestment provisions,
and (c) a percentage of excess cash flow, which percentage is based upon the
Company's net leverage ratio during the relevant fiscal period.
The United States dollar-denominated borrowings under the Amended Credit
Facility bear interest at a rate equal to an applicable margin plus, as
determined at the Company's option, either (a) a base rate determined by
reference to the greater of (i) the prime rate, (ii) the United States federal
funds rate plus 1/2 of 1.00% and (iii) a one-month adjusted Eurocurrency rate
plus 1.00% or (b) an adjusted Eurocurrency rate, calculated in a manner set
forth in the Amended Credit Facility.
Canadian dollar-denominated borrowings under the Amended Credit Facility bear
interest at a rate equal to an applicable margin plus, as determined at the
Company's option, either (a) a Canadian prime rate determined by reference to
the greater of (i) the rate of interest per annum that Royal Bank of Canada
establishes at its main office in Toronto, Ontario as the reference rate of
interest in order to determine interest rates for loans in Canadian dollars to
its Canadian borrowers and (ii) the sum of (x) the average of the rates per
annum for Canadian dollar bankers' acceptances having a term of one month that
appears on the display referred to as "CDOR Page" of Reuters Monitor Money Rate
Services as of 10:00 a.m. (Toronto time) on the date of determination, as
reported by the administrative agent (and if such screen is not available, any
successor or similar service as may be selected by the administrative agent),
and (y) 0.75%, or (b) an adjusted Eurocurrency rate, calculated in a manner set
forth in the Amended Credit Facility.
The borrowings under the Amended Credit Facility in currencies other than United
States dollars or Canadian dollars bear interest at a rate equal to an
applicable margin plus an adjusted Eurocurrency rate, calculated in a manner set
forth in the Amended Credit Facility.
The initial applicable margin with respect to the TLA Facility and each
Revolving Credit Facility will be 1.50% for adjusted Eurocurrency rate loans and
0.50% for base rate loans, respectively. After the date of delivery of the
compliance certificate and financial statements with respect to the Company's
fiscal quarter in which the Amendment occurs (i.e., the Company's fiscal quarter
ending July 31, 2016), the applicable margin for borrowings under the TLA
Facility will be subject to adjustment based upon the Company's net leverage
The Amended Credit Facility requires the Company to comply with customary
affirmative, negative and financial covenants. The Amended Credit Facility
requires the Company to maintain a minimum interest coverage ratio and a maximum
net leverage ratio. The method of calculating all of the components used in such
financial covenants is set forth in the Amended Credit Facility.
The Amended Credit Facility contains customary events of default, including but
not limited to nonpayment; material inaccuracy of representations and
warranties; violations of covenants; certain bankruptcies and liquidations;
cross-default to material indebtedness; certain material judgments; certain
events related to the Employee Retirement Income Security Act of 1974, as
amended; certain events related to certain of the guarantees by the Company and
certain of its subsidiaries, and certain pledges of its assets and those of
certain of its subsidiaries, as security for the obligations under the Amended
Credit Facility; and a change in control (as defined in the Amended Credit
A copy of this press release announcing the entering into of the Amendment is
attached as Exhibit 99.1 to this report.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description of Exhibit
99.1 Press Release, issued by PVH Corp. on May 19, 2016.
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