Kirkland’s gets $12 million FILO delayed-draw asset-based term loan

By Mary-Katherine Stinson

Lexington, Ky., Jan. 26 – Kirkland’s, Inc. entered a term loan credit agreement on Jan. 25 providing a $12 million first-in, last-out delayed-draw asset-based term loan via Gordon Brothers Group, according to an 8-K filing with the Securities and Exchange Commission.

The loan was undrawn at closing. Proceeds from the new facility, when drawn, will be used to provide additional liquidity for ongoing working capital needs, according to a press release.

However, the company is required to draw at least $5 million, the tranche A loan, on or before April 1, or the FILO loan will terminate, according to the 8-K filing.

If the tranche A loan is completed, Kirkland’s will be permitted to make additional draws of up to $7 million in $1 million increments, the tranche B loan, through Jan. 31, 2028.

The FILO loan will mature on March 31, 2028, coterminous with the company’s existing credit facility.

Until the adjustment date on the first anniversary of closing, the FILO loan will bear interest at one-month term SOFR plus a margin of 950 basis points. Following the adjustment, the interest rate will increase to one-month term SOFR plus a margin of 1,150 bps.

If the parties enter into a lease renegotiation services agreement within 90 days after closing, the adjustment date will be pushed out to the second anniversary.

The maximum availability under the FILO agreement is limited by a borrowing base which consists of a percentage of eligible inventory, eligible credit card receivables and furniture, fixtures and equipment, less reserves.

1903P Loan Agent, LLC is the administrative agent and collateral agent for the FILO agreement.

Also on Jan. 25, the company amended its existing facility with Bank of America to permit the FILO loan.

In addition to the undrawn FILO loan, the company has $32 million outstanding under the existing agreement with about $21.5 million available for borrowing under the combined borrowing base formula.

Kirkland’s is a specialty retailer of home decor based in Brentwood, Tenn.

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