Deckers’ restated credit agreement improves pricing, extends to 2019

By Toni Weeks

San Luis Obispo, Calif., Nov. 19 – Deckers Outdoor Corp. amended and restated its credit agreement on Nov. 13 with JPMorgan Chase Bank, NA as administrative agent and Comerica Bank and HSBC Bank USA, NA as co-syndication agents, according to an 8-K filing with the Securities and Exchange Commission.

As with the original credit agreement, the restated agreement provides for a $400 million secured revolving credit facility, a sublimit for letters of credit of $75 million and a sublimit for swingline loans of $5 million. In addition to allowing borrowings in dollars, the restated agreement provides a $150 million sublimit for borrowings in euros, pound sterling or any other currency approved by JPMorgan, each lender and each letter-of-credit issuing bank.

The company has the option to increase the maximum principal amount available under the agreement by up to an additional $200 million, although none of the lenders has committed to provide an increase at this time, the filing said. The previous accordion feature was for $100 million.

The revolving loans and swingline loans are available until Nov. 13, 2019, extended from August 2017. The maturity date may be extended.

Borrowings initially bear interest at Libor plus 125 basis points, and the fees will be 17.5 bps. Following the receipt of the compliance certificate for the year ending Dec. 31, the margin over Libor may vary from 125 bps to 200 bps, and the fees will range from 17.5 bps to 30 bps, in each case based on the company’s total adjusted leverage ratio. In the previous agreement, the margin over Libor and commitment fee was 150 bps to 225 bps and 20 bps to 35 bps, respectively.

Amounts borrowed under the agreement may be prepaid at any time, and obligations are guaranteed by the company’s existing and future wholly owned domestic subsidiaries.

The company may not permit the total adjusted leverage ratio to be greater than 3.25 times as of the last day of any fiscal quarter provided that after making any specified leveraged acquisition, meaning a permitted acquisition having an aggregate consideration of at least $75 million, the ratio may be increased to 3.5 times solely for the last day of the fiscal quarter in which the acquisition is completed and for the last day of the next two subsequent fiscal quarters.

Also, as of the last day of any fiscal quarter, the company may not allow the ratio of consolidated EBITDAR for the period of four fiscal quarters ending on such day to the sum of consolidated interest expenses for such four-quarter period plus consolidated rental expenses for such four-quarter period to be less than or equal to 2.25 to 1.00.

Funds may be used for working capital and general corporate purposes, including acquisitions and stock repurchases.

Bank of America, NA, Compass Bank, Fifth Third Bank and U.S. Bank NA are the co-documentation agents. J.P. Morgan Securities LLC is the sole bookrunner, and JPMorgan and Comerica Bank are joint lead arrangers.

Deckers is a Goleta, Calif.-based footwear company.

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