Coach closes $1.1 billion term loans, $900 million replacement revolver

By Marisa Wong

Morgantown, W.Va., May 31 – Coach, Inc. entered into a credit agreement on Tuesday for an $800 million six-month term loan, a $300 million three-year term loan and a $900 million revolver due May 30, 2022, according to an 8-K filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch, JPMorgan Chase Bank, NA and HSBC Bank USA, NA are the joint bookrunners and joint lead arrangers with Bank of America, NA as administrative agent, JPMorgan Chase Bank and HSBC Bank USA as co-syndication agents and Citibank, NA, TD Bank, NA, U.S. Bank, NA and Wells Fargo Bank, NA as co-documentation agents.

Earlier this month, the company announced that it obtained $2.1 billion of committed bridge financing from BofA Merrill Lynch to help fund its acquisition of Kate Spade & Co. for $2.4 billion. The company will use its new term loans to help finance the acquisition, according to Wednesday’s 8-K filing.

The new revolver, which will be used for general corporate purposes, replaces the company’s existing revolver dated March 18, 2015 with JPMorgan Chase Bank, NA as administrative agent. The prior facility was terminated upon closing of the new facility.

Revolving commitments under the new facility may be increased by up to $300 million.

There is a $125 million sublimit for standby letters of credit and a $20 million sublimit for swingline loans.

Revolving loans may be made in dollars, euros, pounds sterling or Japanese yen.

Borrowings bear interest at Libor plus an applicable margin based on the leverage ratio. The applicable margin for term loans ranges from 87.5 basis points to 137.5 bps. The applicable margin for revolving loans ranges from 80 bps to 120 bps. The initial spreads are 137.5 bps and 120 bps, respectively.

Commitment fees, also based on the leverage ratio, range from 7.5 bps to 17.5 bps and are initially 17.5 bps.

The credit agreement requires the company to comply with a maximum leverage ratio of 4.0 to 1.0.

Coach is a New York-based luxury leather goods company. The acquisition is expected to close in the third quarter of 2017.

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