Collective Brands gets up to $300 million revolving line of credit

By Marisa Wong

Madison, Wis., Aug. 17 - Collective Brands, Inc.'s wholly owned subsidiary Collective Brands Finance, Inc. entered into a second amended and restated loan and guaranty agreement on Aug. 16 for up to $300 million, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

The agreement amends the loan, guaranty and security agreement dated Jan. 15, 2004 and arranged by Wells Fargo Retail Finance, LLC.

The second amended and restated agreement includes an up to $300 million revolving line of credit and a letter-of-credit subfacility.

Wells Fargo Capital Finance, LLC is the lead arranger and bookrunner for the second amended revolver. Wells Fargo Bank, NA is the administrative agent, Bank of America, NA is the syndication agent and JPMorgan Chase Bank, NA is the documentation agent.

Loans under the second amended revolver will bear interest at Libor plus 175 basis points to 225 bps, based on average availability.

Collective Brands will also pay a letter-of-credit fee at a rate equal to 1.25% to 1.75% per year for documentary letters of credit and 1.75% to 2.25% per year for standby letters of credit based on average availability.

If an event of default occurs, all borrowings under the second amended revolver will then bear interest - and letter of credit fees will accrue - at the otherwise applicable rate plus 200 bps per year at the election of the agent or a majority of the lenders.

Under the second amended revolver, the company and its subsidiaries are required to maintain a minimum consolidated fixed charge coverage ratio of 1 to 1 on a trailing 12-month basis during any covenant triggering period.

A covenant triggering period begins on the earlier of (a) the occurrence and continuation of an event of default or (b) the date on which excess availability for the preceding five consecutive business days is either less than 12.5% of the line cap (the lesser of the maximum revolver amount and the borrowing base in effect) or less than $25 million.

The period terminates when (a) the excess availability for the preceding 30-day consecutive period exceeds the greater of (i) 12.5% of the line cap or (ii) $25 million and (b) pro forma and projected excess availability for the subsequent 60-day consecutive period are more than the greater of (i) 12.5% of the line cap or (ii) $25 million.

The second amended revolver is guaranteed by Collective Brands and all of its subsidiaries and is secured by substantially all of the company's assets, with the second amended revolver having first priority in accounts, inventory and certain related assets and the company's 2007 term loan facility having first priority in substantially all of the remaining assets.

Collective Brands is a Topeka, Kan.-based combined footwear, accessories and lifestyle brand company.

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