iMedia conducts debt reduction event, cutting debt by $53 million

By Devika Patel

Knoxville, Tenn., April 12 – iMedia Brands, Inc. has completed several transactions this week that have collectively reduced its interest expense by $7 million and cut the company’s debt by $53 million.

The company announced Wednesday that, on Monday, it simultaneously completed a sale-leaseback transaction with Pontus Net Lease Advisors, LLC, a division of Pontus Capital, along with multiple other transactions.

iMedia also entered into a six-month forbearance agreement with its senior lenders, which, with the other transactions and the sale-leaseback, were referred to in a Wednesday press release as the company’s “debt reduction event.”

The company’s debt as of Wednesday, after giving effect to the debt reduction event, is approximately $123 million, which is approximately 41% lower than the company’s $207 million debt level at the end of the first quarter of fiscal 2022.

Debt reduction event

The company completed a sale-leaseback transaction, raising $48 million in gross proceeds.

Also, iMedia conducted a private investment in public equity, or PIPE, on Monday, raising $3.5 million in gross proceeds. Several investors purchased notes bearing a 7.75% coupon that are convertible into common stock and warrants. Insiders invested an aggregate of $300,000 in the PIPE.

In addition, the company retired its $29 million Green Lake term loan and entered into an amendment to reduce $12 million of the outstanding principal of its $20 million notes issued by iMedia & 123tv Holding GmbH.

The company applied $12 million of the sale-leaseback proceeds to its ABL revolving line of credit in connection with an ABL forbearance, which is now available for reborrowing.

Under the senior ABL forbearance, effective upon closing of the sale-leaseback transaction, the company executed its tenth amendment with its senior asset-based lenders under its revolving credit facility agented by Siena Lending Group LLC for a six-month forbearance term that is extendable another three months at the company’s option.

The forbearance provides iMedia adequate time to replace or refinance the ABL credit facility in fiscal 2023. Key terms of the forbearance include removal of the net senior debt leverage ratio covenant, an adjusted availability block, an amendment fee of $850,000, a 200-basis-point increase in interest rate, additional potential milestone fees and early termination fees and application of $12 million of the new sale-leaseback proceeds to reduce borrowings under the senior ABL revolving line of credit.

“Completing our debt reduction event this week was a milestone win for us, but, make no mistake, it was a struggle to complete,” chief executive officer Tim Peterman said on the company’s fourth quarter and year ended Jan. 28 earnings conference call on Wednesday.

“The challenge began shortly after Thanksgiving when a new asset appraisal became effective, materially reducing our company's liquidity.

“We worked collectively with our asset-based lenders, who fortunately provided us with the time to shift our priorities from net sales growth and customer engagement into short-term cash optimization activities to fund principal repayments and we reestablished compliance with our senior lender by making $19 million in principal repayments in about two months,” Peterman said.

“Fortunately for us, our lenders were very accommodating and flexible and they worked with us to provide us the time to make those repayments.

“Now that we have simultaneously closed these six transactions that are all connected by the singular purpose of reducing our debt by $53 million and reducing our annual interest expense by $7 million, our teams and vendors are rapidly shifting their focus back to our normal day-to-day fundamentals,” he said.

Cash was $7,187,000 as of Jan. 28, 2023, compared to $11,295,000 as of Jan. 29, 2022.

Net long-term debt was $169,819,000 as of Jan. 28, 2023, compared to $176,432,000 as of Jan. 29, 2022.

Current portion of long-term debt was $6.95 million as of Jan. 28, 2023, compared to $14,031,000 as of Jan. 29, 2022.

iMedia Brands is an interactive media company based in Eden Prairie, Minn.

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