CHRS secures proactively addressed revolving credit facility of $225 mn
Charming Shoppes Inc, a leading multi-brand apparel retailer specializing in women's plus apparel, announced it has entered into a three-year loan agreement for a new senior secured revolving credit facility in the amount of $225 million. Wells Fargo Retail Finance and Bank of America Merrill Lynch were joint lead arrangers and joint book runners for the facility.
Also participating as members of the Company's bank lending group were GMAC Commercial Finance, JPMorgan Chase, U.S. Bank and Barclays Bank. The credit facility provides committed revolving funding through July 2012, and replaces the Company's $375 million revolving credit facility.
Jim Fogarty, President and Chief Executive Officer of Charming Shoppes, Inc. commented, "We are pleased to have proactively and successfully addressed the maturity of our revolving credit facility. Maintaining strong liquidity -- our revolver availability and our cash position -- is a critical priority for us, and even more critical in today's funding environment. This financing and our strong liquidity allow us to continue our work focusing on our customer and improving our business."
The amount of credit that is available from time to time under the agreement is determined as a percentage of the value of eligible inventory, accounts receivable and cash, as reduced by certain reserves. In addition, the new agreement includes an option whereby the Company may increase its maximum credit up to $300 million, based on certain terms and conditions. The credit facility may be used for general corporate purposes, and provides that up to $100 million of the $225 million may be used for letters of credit.
Borrowings under the new agreement will generally accrue interest at a margin ranging from 3.75% to 4.25% over the London Interbank Offered Rate ("LIBOR"). As long as the excess availability under the new facility is at least $40 million, the Company will not be subject to financial covenants under the terms of the agreement. The Company does not currently anticipate borrowing under the facility; however, were it to borrow at the present time, it is expected that borrowings would be at the lowest end of the margin range over LIBOR.
Eric M. Specter, Executive Vice President and Chief Financial Officer of Charming Shoppes, Inc. commented, "Over the last year, we have actively sought to simplify our business through the divestiture of our non-core misses apparel catalogs and the closure of figure Magazine, shoetrader.com and the Lane Bryant Woman catalog. Given these activities, we have reduced the size of our new revolving credit facility to one that is appropriate to our current business model, and we are very pleased to continue our banking relationships with Wells Fargo, Bank of America Merrill Lynch, and each of the other banks in this transaction."
At May 2, 2009, Charming Shoppes Inc operated 2,272 retail stores in 48 states under the names LANE BRYANT, LANE BRYANT OUTLET, FASHION BUG, FASHION BUG PLUS, CATHERINES PLUS SIZES, and PETITE SOPHISTICATE OUTLET.
Charming Shoppes Inc