Aaron's amends facility agreements with SunTrust to extend maturity

By Jennifer Chiou

New York, Dec. 15 – Aaron's, Inc. entered into on Dec. 9 an amendment to its loan facility agreement with SunTrust Bank as servicer, extending the termination date by an additional 364 days, according to an 8-K filing with the Securities and Exchange Commission.

The filing stated that the franchisee loan facility amendment also modifies certain financial covenants and related financial terms to make them more favorable to the company and provides for the joinder of certain new banks and other financial institutions as participants.

In addition, the total debt to EBITDA ratio financial covenant was amended to increase the covenant limit to 3.25 to 1.00 from 3.00 to 1.00 for the fiscal quarter ending Dec. 31 through each fiscal quarter thereafter to and including Dec. 31, 2015. From that point, the covenant limit will return to 3.00 to 1.00.

The filing said that the fixed-charge coverage ratio was amended to decrease the covenant limit to 1.75 to 1.00 from 2.00 to 1.00 for the fiscal quarter ending Dec. 31 and each fiscal quarter ending thereafter through and including Dec. 31, 2015 and then returning to 2.00 to 1.00 for each fiscal quarter ending thereafter.

Aaron's also entered into an amendment to its credit agreement with SunTrust Bank as lender and administrative agent, extending the maturity date for an additional five-year period, increasing the revolving credit facility to an aggregate principal amount of up to $225 million and providing for the extension of an additional term loan advance in the aggregate amount of $1,906,250.

The amendment, among other things, also modified the amortization payments for the term loan facility to provide for equal quarterly installments of $3,125,000, provided for the joinder of certain new banks and other financial institutions as lenders, amended and restated certain schedules and modified certain financial covenants and related financial terms consistent with the financial covenant modifications in the franchisee loan facility amendment.

As of Dec. 9, $140 million was outstanding under the existing credit facility, as amended, including $125 million in term loan borrowings.

Aaron's is an Atlanta-based sales and lease ownership company and specialty retailer of consumer electronics, computers, residential and office furniture, household appliances and accessories.

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